New Europe Print Edition - Issue 954

Turkish threats against Cyprus|Page 9

NEWEUROPE19th Year of Publication | Number 954 | September 25 - October 1, 2011| € 3.50 www.neurope.eu

IN THIS ISSUE EU PolicyEU must embrace complete gender equality policies|Page 13

EU-WorldBoosting the EU-India strategic partnership|Page 7Candidates lining up in Irish presidentialelections|Page 10Gorbachev: Russia committed to maintaining the status quo |Page 14

Energy & ClimateGazprom eyes LNG markets in Asia |Page 16Kiev to compromise with Moscow to revise gas deal |Page 17

Country newsMinister: French banks don't need recapitalising|Page 23Jaguar Land Rover invests in low emissions|Page 24Italian Banker shrugs off S&PDowngrading|Page 25IKEA opens in Bulgaria|Page 32Azerbaijan to boost share of renewables|Page 38European court ruling chills plaintiffs|Page 39

Editorial & OpinionGermany will not let Greece down |Page 4United States top brass wants contact with Iran|Page 5Socialism got crippled by Centralisation,Capitalism by Concentration|Page 6Vickers Validation?|Page 8

Germany's BASF and France's EdF recentlyagreed to join Russian gas monopolyGazprom and Italy's ENI in building theSouth Stream gas pipeline across the BlackSea. Although the European Commission hassaid it is not against South Stream it clearlyprefers its own Nabucco gas pipeline that willbring new sources of gas to Europe bypassingRussia. “We see that the European Uniondoes not want this South Stream and is tryingto struggle with this project,” KonstantinSimonov, general director of the RussianNational Energy Security Fund told NewEurope. “I can understand if Europe will beginto struggle with Altai pipeline because Russia

wants to give the same gas to China. ButSouth Stream is a pipeline which in the futurewill connect Russia with the European Unionso this gas is for Europe. In my opinionEurope first of all must think about gas andonly then Europe must think about origin ofthis gas,” Simonov said.

Europe is thinking about diversification.“Europe must understand that there won’t bein the nearest future gas from Iran, Iraq andTurkmenistan. It is a problem and I hope thatthere will be no ‘war’ between Russia andEurope,” Simonov said, adding that Russiaalso needs Europe. “I’m absolutely sure thatwithout the help of Brussels we cannot solve

the problem of Ukraine. We need theEuropean Union as a referee or an instrumentof pressure on Ukraine,” he added.Geopolitical Forum Director Marat Terterovtold New Europe that both “Nabucco andSouth Steam are subject to political lobbyingfrom various influential groups.”

But South Stream is the least of Nabucco’sproblems. The EU-backed 31 billion cubicmetre per year Nabucco is competing withthe smaller and 10 bcm Interconnector-Turkey-Greece-Italy (ITGI) and the Trans-Adriatic Pipeline (TAP) to secure 10 bcm ofgas from the second Phase of Azerbaijan’sShah Deniz field.

Nabucco, South Stream gas pipelines compete in Southern Europe

·Page 15

There can be only one

Map of the South Stream Pipeline. Insert: The route of Nabucco.

FASHION & STYLE

Swirling Whirling LondonPage 19

GREECEGreece announced the latest austerity mea-sures comprising 200,000 fewer public sectorjobs, severe cuts in pensions and governmentsector wages, new taxation and a number ofprivatisations ·Pages 2, 3, 31

KASSANDRA The latest administrative invention of Eur -opean Commission President Jose Barroso,the Task Force for Greece, is about to be offi-cially launched and only a few are missing.Their mission should not fail ·Page 40

ENERGYAs global warming intensifies the race tolay claim to the Arctic and its massive oiland gas reserves, Russia vowed to increaseits military presence in the region, tellingNATO to stay out ·Pages 14, 17

ECONOMYOn 22 September, the world’s financial mar-kets suffered a quasi-meltdown, with lossesacross the board after investors heard theFed describe, in dark tones, the prospects forthe US economy ·Page 4

ANALYSIS Page 2 | New Europe NEW EUROPESeptember 25 - October 1, 2011

NE 15 YEARS AGOJerzy 'Jericho' Buzek blew the horn and all the power went off

The Shooting Gallery

In the year 1996, the IMF decided to sell 420 tonnes of gold, in the face of it in order to step up assistanceto poor countries. In reality this sale of gold came under the then generally held view that central banks andthe IMF should “get rid” of a good part of their gold reserves. From 1996 until 2004 western central banks,mainly European and the IMF got rid of approximately 5,000 tons of gold. All those decisions came underthe then generally held view that the world financial system was securely anchored in the major investmentbanks of New York, London, Paris, Frankfort and Geneva. Not for a second did it cross the minds of one ofall those thousands of economists in the banking industry and the monetary authorities that a credit crisismay lurking around.

Greece's ‘other’deficits

There is no question that Greece has been dragging its feetin curbing fiscal deficits. After having reduced the deficit toan unsustainable 10.4% of GNP in 2010, down from anexplosive 15.4% in 2009, it has abandoned efforts in thisdirection. If nothing changes, the deficit could end up as high as 10%at the end of the year, and just a little lower in 2012 – it wouldthen prove impossible to zero or turn it to surplus in 2013, asthe EU-ECB-IMF troika agreed. The three are covering allthe financial needs of the country with soft loans – thismeans that Greece should be given €25 billion more loansevery year to cover its new gaps on top of what it is receivingto pay off old debts. In this way, the Greek debt will grow toan unsustainable peak, making a default and haircut unavoid-able, but the rest of the Eurozone and the wider westernfinancial world could not accept this. This was made quite clear to Greek Finance MinisterEvagelos Venizelos during the Eurozone and ECOFINmeetings in Wroclaw, Poland on 17-18 September. USTreasury Secretary Timothy Geithner, who was present inboth councils, said that the Greek situation was now alsothreatening world financial markets. In short, the message toAthens was clear – you will not get a sniff of your next loaninstallment if you don't honour your obligations.Returning to Athens, the Greek minister announced aground-breaking package of measures containing a tax onproperty, the long due lay-offs and wage cuts in the publicsector, the liberalisation of market services and the realisationof a number of privatisations. This is an attempt to do in twoweeks, before the end of September, what should have beendone since the beginning of the year. Apart from the operational difficulties in applying the newplans that the government has announced, it is very interest-ing to observe the political and the social background that ledthe country to the point it is today. The government has been postponing difficult decisions, expect-ing the rest of the Eurozone to go on supporting its brinkmanshippolicies. As for the major opposition party, New Democracy, itsleader Antonis Samaras, speaking in Thessaloniki during theweekend, said that he can reduce taxation and relaunch growthwithout laying off any public-sector workers. He also said that hewould renegotiate the agreement with the troika – all, even thoughhe knew that the Eurozone had issued an ultimatum. He wenteven further, and asked for an early general election, adding that“if we don't get a clear majority in it, we will hold a second one”.Obviously, he doesn't care if, in the meantime, his country goesbankrupt and the same would appear to go for the two small left-ist parties in parliament. And what about the trade unions? None of them recognisebarely any responsibility vis-a-vis the national emergency –on top of this, some in the state sector are more aggressive,such as GENOP-DEH, the Public Power Corporation tradeunion, which stated that they will sabotage any governmentplans to cash in the new property tax through electricity bills. In short, the political and the social environment is now quitedifferent from November 2009, when this government cameto power. At that time, the general political and social atti-tude was positive for a difficult but fair multi-annual auster-ity programme. Now however, after two years of trials, fail-ures and over-taxation of the same half of the population,Greek society is in a very awkward position, without any vis-ible political solutions, and a society in such dire straits ishighly unpredictable.

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ISSN number: 1106-8299

By Dionyssis Kefalakos

ANALYSISNew Europe |Page 3NEW EUROPE

September 25 - October 1, 2011

Mr Philipp Rösler, the German viceChancellor, Minister of Economics andpresident of the Free Democratic Party,one of the three party governing alliance,was last week forced to make a full U-turnon his rhetoric.

Until last Wednesday he was advocatingthat Greece should be left to rot and wassceptical in approving the endowment ofthe European Financial Support Facility,the anti crisis Eurozone mechanism, with€440 billion. The half Korean, Germanpolitician though, realized that his partywas threatened with extinction, if hecontinued on this anti-European line hehas been following until very recently.Voters showed him their disapproval inmany regional elections over the pastmonths and kept his party out of regionallegislatures.

Rösler has attempted to introduceEuroscepticism in the political life of acountry, which became the largest exporterin the world, thanks to the creation of theEuropean Union. Being a young man ofmixed national origins his DNA mightlack some genes embedded in the averagemiddle aged German, standing there aswitness to the fact that this country afterstarting two world wars, finished at theopposite direction than the “Lebensraum”ideal intended and lost a good part of itsbest lands in Silesia.

Germans learned the hard way that theycannot conquer Europe by the force ofarms. Finance might prove more effective.

Over the past few years, Germany’sprodigious exports benefited from thecreation of the Eurozone at the turn of theMillennium.

The half Korean/German president ofFDP having followed Eurosceptic linesover the past months and lately havingpromoting the idea of a Greek bankruptcyand probable ousting from the Eurozone,was obliged last week to state that “allEurozone countries are to stay there” whileparticularly for Greece he said that “wewill do everything in order Greece toregain its economic dynamism”.

If this complete U-turn had happenedgradually over time, it might have beenjustified by other factors like a genuinechange of ideology and not by sheerpolitical cynicism and arrivisme as it smellsnow. He is bound, however, to learn thehard way that such fast and abrupt politicalU-turns are not highly estimated inGermany and as The Apostle says, “the lastfallacy will be worse than the first one”.

It seems however that sudden politicalU-turns are very common nowadays andnot only individual politicians, but alsoentire countries perform this difficultmanoeuvre. On the same day Rösler did

his, the Finnish Parliament voted for thenew richer and flexible EFSF mechanismnow having a dowry of €440 billion.

The country's government however didnot say a word about the collaterals itasked for some weeks ago to cover theloans that Finland is to accord to fellowEurozone countries in dire straits. Doesthis fast change have to be attributed to aGerman “advice” ? Very likely. It seems thatthose three countries, Finland, Hollandand Austria are not called “Merkelets” fornothing.

By the same token, it is now more thancertain that the German Bundestag, understrong Merkel pressure, is to pass the samelaw to support Greece and create the newEFSF mechanism. In short, one after theother, all the champions of Euroscepticismwithin the Eurozone are now quietly votingfor the package that the 17 leaders agreedin July, which provides the base for a clearanswer to the zone's sovereign debtproblems through the reshuffled EFSF, andestablishes the second rescue programme infavour of Greece. There is no doubt thenthat Greece will not be left out in the cold.But why did all those people decide to helpGreece? Let’s see the facts.

WHAT COSTS MOREAs the Lehman Brothers bankruptcy

and what followed has proved, that itwould have been much cheaper, in everyrespect, to have paid for the rescue of thisbank than to later provide support for theentire western financial system. Greecearrived at the position it is now, after

Athens discovered that on top of the sinsof its governments during the last tenyears, it had to finance the liquidity of thebanks as well.

The cost of saving Lehman would havebeen to the tune of $150 billion, while lateron, the major western countries had tospent at least $11 trillion to keep theirfinancial system alive. The same question isasked today and as it seems, the answerthat Germany comes up with, is thatGreece, Ireland and Portugal should berescued now, rather than try to save theentire Eurozone financial system later on.

If however, this is the way things shouldbe, the moral issue remains unsolved.Sinners will not be paying the price of theirrecklessness. But then again, if it isacceptable to save the money sharks of theinvestment banks in the US and Europe,why not spend much less to support thewell being of entire nations? And, mind you,when it comes to people the aid does notcome cheap. Greeks are paying a very dearprice for their rescue in both material andpsychological terms, while bankers are stillin their position cashing in billions inbonuses.

NEW CHAPTER IN TRAGEDYGreece has been under heavy financial,

political and psychological pressure overthe last two years. One package of taxes,lay - offs and wage and social spendingcuts comes after the other. This lastWednesday the Greek minister of Finance,Evagelos Venizelos, announced the latestausterity measures comprising 200,000

fewer public sector jobs until the year2014, 30,000 of them this year, new andsevere cuts in pensions and governmentsector wages, new taxation on real estateproperty and a number of fireprivatisations.

In more details, the governmentannounced further cuts to public sectorwages and all pensions above a monthlybenchmark of €1,200, a large reduction ofthe non taxable family yearly income to€5,000 instead of the €12,000 currentlyand a new property tax to be cashed inthrough electricity bills. All this constitutesa new and more aggressive package ofmeasures than the initial one applied in2010.

The question is however, if those newmeasures will be accepted by society. Themovement “den plirono” (I don't pay) isgaining momentum and there is at leastone political party in the Parliament, theGreek Communist Party with around 7%of the vote, which promotes this attitude.

In any case, the success of the newpackage will be seen before the end of theyear. The new loan instalment of €8 billion,however, will be released to Greece nomatter what. At the end of the day, theEurozone and more precisely Germanyand France will not let Greece to go bust,under any circumstances. Obviously thecost to save Athens is very low comparedto what will be at stake, if Greece goesbankrupt and exits the Eurozone, despitethe fact that those two possibledevelopments do not go forcefullytogether.

FINANCIAL

Eurozone is tested once more under the Athens Acropolis


Civil servants burn notifications for payment of an extraordinary surtax on incomes from the Tax Bureau outside the Finance Ministry in Athens, Greece, 20 September |EPA/ORESTIS PANAGIOTOU

Page 4| New Europe NEW EUROPE

ANALYSISSeptember 25 - October 1, 2011

Last Thursday, 22 September, theworld’s financial markets suffered aquasi meltdown, with losses across theboard after investors heard the Feddescribe, in dark tones, the prospectsfor the US economy and Greeceembarked on a new, precariousprogramme to arrest its sky-rocketingdebts and deficits and Ben Bernankedid not convince financialcommentators that his plan to swapshort-term US bonds for longer-termones would solve the problems of theAmerican government.

MARKETSBoth those developments in the US

and Greece acted as a catalyst tomarkets and investors rushed to exitfrom stocks and bonds that mighthave been affected. In addition,growth prospects in the Eurozoneand China seemed a touch bleakerlast week, with more evidencesurfacing and supporting thepossibility of a new slowdown in bothmajor economies.

Bank stocks on both shores of theAtlantic Ocean were at the epicenterof the market’s problems, after theEuropean Systemic Risk Board saidthat banking firms exposed tosovereign debt should be recapitalized.

The issue of the capital adequacy ofEuro-pean banks is burning, giventhat the Euro-pean Central Bank(ECB) in executing the latest “stresstests” in July did not predict, in aworst-case scenario, the probablefailure of one or more governments.

This was an obviously political

choice, based on the reassurances givenby the Eurozone authorities that nomember state would be left to default.In any case, the next day, 23September, markets recovered early inthe day in response to a supportiveannouncement by the G20 leaders, butthen dived again. The G20 meeting inNew York, ahead of the IMF andWorld Bank yearly convention, statedthat the 20 major economies of theglobe would take "strong andcoordinated" action to support theworld’s financial system, but it seemsthat investor retained their doubts.

These developments support theview that the system, and morespecifically the western financialmarkets, are still totally dependent oncentral banks. Not to say anythingabout the BRICs financial systemsbeing under direct control of thegovernment.

Another strong proof of this is therecent alliance formed by the majorcentral banks of the developed world– the European Central Bank, theAmerican Fed, the Bank of England,the Bank of Japan and the SwissNational Bank joined forces the weekbefore last in the face of an acuteshortage of dollars in the Eurozone,which was threatening to develop intoa major credit meltdown. The fiveinstitutions assured that they wouldoffer unlimited quantities of dollars inthree auctions before the end of theyear, one per month from October toDecember.

Obviously, those three month’smaturity loans, the last of which willexpire in March 2012, could bereassigned under the same terms.

THE BANKSThis alliance by the five central banks

stands as infallible testimony for twoissues. Firstly, that the financial systemof the developed world is still in direstraits and secondly, that all thosegovernments are adamant about notallowing even the remote possibility of ameltdown resulting from the Greek‘tragedy’ or the latest American risks.

Is to be noted that the short supply ofdol-lars in the Eurozone began in theFrench banks, with their large exposureto Greek values, and has threatened toinfect the en-tire euro area. The realdanger was that banks might beginavoiding or stop altogether lending toeach other in the interbank market, notonly in dollars but in all majorcurrencies.

This fear comes from the reality thatnone believes that the others have toldthe truth about their real exposure torisks, and that no banker would makeany concrete comment on this issue.

Each one judges the others by whatthey are doing in their ‘back rooms’ toartificially inflate profits and bonuses, byunderpricing the risks that are thesource of those profits.

In the meantime, no bank reallyseems to care about carrying out thenormal duties that banks are supposedto follow, namely taking andsafeguarding deposits and lend-ing tothe real economy.

The banks’ main source ofprofitability remains the same as in theimmediate pre-crisis years - this time,however, they are placing their bets withgovernment and central bank money,whereas until 2008, they were bettingwith depositors’ funds.

MONETARY ECONOMY

What really happens in the markets?

Seen on a large outdoor screen World Bank President Robert Zoellick participates in the Open Forum on Gender at the 2011 IMF/World Bank An-

nual Meetings in Washington, DC, USA, 21 September 2011.|EPA/SHAWN THEW

Germanywill not letGreece down

Despite the widespread belief, widely promoted by themajor German media, that the financial aid accorded toGreece is utterly unpopular in their country, the last regionalelections in Berlin and elsewhere do not confirm this at all. The strongest “enemy” of Athens in Germany, Vice Chan-cellor and Minister of Economics, Philipp Rösler, Presidentof the Free Democratic Party has suffered some major blowsin regional elections. FDP turned out absolutely catastrophicresults in the latest Berlin regional elections, favoured by abearish 1.8% of voters, far away from the minimum 5%needed to just enter the legislature. And this only days afterRösler had consciously and conspicuously differentiatedhimself from Chancellor Angela Merkel and the Ministerof Finance, Wolfgang Schaeuble, over the Greek issue, say-ing that an Athens default should now be contemplated. The FDP leader has followed a distinctively euroscepticattitude during the past months in sharp contrast withthe strategy followed by Christian Democrats like theChancellor and the Minister of Finance. This diversifi-cation however, did not do any good to the FDP as theparty goes from one disaster to another. Earlier in Sep-tember, the party lost all its seven seats in the state par-liament of Mecklenburg-Western Pomerania. Thingsseemed to turn so bad for Rösler, that his distancing fromthe wider German pro European strategic choice, threat-ens his party with total extinction. Only days after his controversial article appeared in the DieWelt, where he wrote that, "there should be no taboos", inreference to a possible Greek default, it was his party thatwas ousted from the Berlin legislative. Seemingly his over-all policy proposal for less German commitment to Europe,is totally rejected by the citizens of this country. It is alsocharacteristic that only days after the Rösler article appearedin the prestigious Die Welt, the newspaper wrote an edito-rial, saying that the repayment of the WWII Greek loan toNazi Germany can be fought in the courts. It must be noted that Greece is the only country that neverreceived one penny in war indemnities from Germany. Ontop of this, Greece is also the only country that Nazi Ger-many borrowed money from and also signed loan agree-ments for that. Throughout the last war Nazi Germany justconfiscated whatever they wanted from the rest of Europe,but in the case of Greece, Berlin decided to officially ask forloans. Today's value of those German loans from Greececould come to some tens of euro billions, given that interestof the past 70 years could have been capitalised. In any case, the German government seems adamant on itsoverall position that it will continue helping Greece manageits problems, but Athens has to adhere strictly to the termsof the second agreement with the troika.As for the Greek economy, exports and tourism attainedvery good results so far this year. At the same time importshave dropped due to the abrupt fall of internal consump-tion. All that resulted in a substantial decrease of the chronictrade deficit. These are the first signs that the private sec-tor of the Greek economy reacted positively to the firstpackage of measures that the government adopted at thebeginning of 2010. A number of Greek economists say that any reduction inthe overall public sector wage bill and individual remuner-ations have a positive effect on the country's competitiveness,because they trigger wage reductions in the private sectortoo. As a result they help exports, through macro and microeffects. In short there are signs that the applied mix of poli-cies is in the right direction and consequently it is the gov-ernment's responsibility to draw this logic to its end.



ANALYSISNew Europe |Page 5NEW EUROPE


On two occasions in the last month, the Chairman of theJoint Chiefs of Staff of the United States, Admiral MikeMullen, said in public that he was concerned about lack ofcontact between his country and Iran. On 20 September, henoted that “Even in the darkest days of the Cold War, wehad links to the Soviet Union.” He went on to say: “We arenot talking to Iran. So we don’t understand each other. Ifsomething happens, it’s virtually assured that we won’t get itright, that there will be miscalculations.”According to the host organization’s report of the meeting atthe Carnegie Endowment for International Peace, Mullenwent on to suggest that it would be in the American nationalinterest to resume contact with Tehran at either a political,diplomatic, or military-to-military level.On 14 September, as reported by the Pentagon, Mullen saidthat Iran is attempting to develop nuclear weapons and wantsregional hegemony in the Middle East; and the lack of con-tact between the United States and Iran could be dangerousto the region and the international community.One could see these views more or less as a statement of theobvious – the United States needs to be talking to countriesthat give it concern. However, given the negative politicalsentiment in the United States toward Iran and given therigid policy position of the U.S. government, then Mullen’sstatements seem to indicate a division of some sort in theObama Administration about the wisdom of continuing toisolate Iran diplomatically. Another possible meaning of theremarks, though less likely, is that Mullen is just expressingU.S. frustration that as far it is concerned, Iran has not con-ducted itself properly to allow re-establishment of contact;and that it is Iran’s behavior that leads to the lack of contact.Assuming the former interpretation (and not the latter) iscorrect, Mullen’s views open up the obvious question of whatis it that the United States has to do or can do to start mean-ingful bilateral conversations on both nuclear issues and re-gional security issues. Any restoration of formal relations seems highly unlikely inthe next 2-3 years. The United States has, at least in a practi-cal sense, made that conditional on a number of significantpolicy reversals by Tehran. In U.S. policy, Iran is more or lesswhere it was when George Bush gave his “axis of evil” speechin 2002. That said, the route of informal diplomatic “contacts”would be relatively easy if Iran and the United States were bothwilling. Yet Mullen’s mention of military and political contactsin contrast to diplomatic efforts suggests a complete roadblockon one side or both to unofficial diplomatic contact. Militarycontacts would seem even more difficult. It is almost impossi-ble to imagine that the State Department would agree to theidea that military officers would conduct any part of the diplo-macy with Iran while diplomatic relations are so strained.Moreover, at least as far as the public record is concerned, theredoes not seem to be much of a foundation for military to mil-itary contacts. So what about “political contacts”? In the runup to a Presidential election in the United States in 2012, thiswould seem at first glance to be extremely high risk. Then thereis the problem of who in Iran to talk to. The level of the con-tact would need to be finely set, and at a fairly middle level, tominimize political risk. Any prediction of what might comefrom Mullen’s statements would be foolhardy. Yet the ground-breaking significance of his comments as a very direct and un-usually public opening to talk with Iranian leaders cannot bediscounted.

EWI is a New Europe content partner

By Dr. Greg Austin

United States topbrass wants contact with Iran

The “countdown to change” has begun,said Edward McMillan-Scott, vice presi-dent of the European Parliament as he an-nounced the results of research into thecosts of the “travelling circus” of the trek toStrasbourg for plenary sessions of the par-liament. Their figures say the additionalcost of Strasbourg is €180 million and pro-duces 19,000 tonnes of CO2 each year.

Although the regular trips to Strasbourgare unpopular with many MEPS and hasbeen held up to ridicule by many citizens,France is keen not to lose the ‘prestige’ ofpart-hosting of the parliament. In March,MEPS voted to amalgamate two Stras-bourg sessions, a decision that the Frenchgovernment is contesting in the courts.

The centre-right EPP group, which isthe largest block in parliament, is the only

group supporting both seats. "At present,all the other groups want an end to Stras-bourg so parliament is pretty much unitedon this,” said McMillan-Scott.

McMillan-Scott added, "Several mem-ber states, including the UK and theNetherlands, want change and France iscurrently isolated in insisting that we keepStrasbourg," and added that the upcom-ing elections in France could provide a “po-litical space” to persuade those supportersof the twin seats to change their minds.

Another opportunity for pushing forthe ‘one seat’ solution could be the midterm elections in the parliament, in Janu-ary next year.

“Any MEP standing for either a Par-liamentary or political group position atthe mid term in January 2012 will be

asked to pledge his or her support for theproposition that MEPs should have theright to decide when and where to meet,"said the Vice President. He also pointedout that Martin Schulz, leader of theS&D Group, who failed to vote in Juneon the subject, had already announced hiscandidacy for the presidency of parlia-ment and that his likely replacementwould either be Stephen Hughes MEPor Catherine Trautman, a former mayorof Strasbourg.

McMillan-Scott has been re-nomi-nated by his UK colleagues to stand againas Vice-President and Alexander Alvarohas been nominated as leader of the Ger-man liberal MEPs from January: bothpledged to continue their campaign for aSingle Seat.

EUROPEAN PARLIAMENT

One seat to rule them allCampaign to end the ‘tale of two cities’

The European banking sector needs tobe reduced to properly fit its impor-tance relative to the overall economy,one MEP has said at the launch of anew report on the banking industry inEurope.

The report, Business Models inEuropean Banking: A pre- and post-Crisis Screening, complied by theCentre for European Policy Studies(CEPS) with the support of the Eu-ropean Parliament’s Green group, ex-amines the business models,performance and risks of twenty-sixof Europe’s largest banks from theperiod 2006-2009.

Speaking at the launch of the reporton 19 September in the EuropeanParliament, Green MEP PhilippeLamberts said “the current state of af-fairs in Europe is characterised by adual crisis: the debt crisis, and eco-nomic governance, and the overex-tended, irresponsible banking sector”.He said that with much done on thefirst part, it was time to have examinethe second.

“We need to reduce the [banking]sector to a size relative to the size ofthe economy”, he continued, addingthat “it makes no economic sense toallow the financial institutions to per-sist so they can bring down the econ-omy”.

He also said that he wanted to seean end to the “large number of CEOsof big financial institutions dictatingterms that they would accept” from

EU legislation.He said that the report was an op-

portunity for all those who oppose thecurrent system to prepare an a counterargument that is “well-rooted in fact,”and that those arguments needed to bemade now. “We may not have anotherchance before the next crisis hits”, headded of the possibility of preparing asimilar report in the future.

The report examined twenty-six ofEurope’s largest financial institutions,distinguishing business models be-tween, retail, investment and wholesalebanks. The study concludes that retailbanks appear to be more stable thanthe other models, “being less likely toreceive state support and continuing tosupport the economy in the midst ofthe crisis.” This can be contrasted withwholesale banks, characterised by lowliquidity assets and unstable funding,which tend to perform the worst over-

all and are more likely to receive statesupport.

The main policy conclusions of thereport include promoting the retailbank model through the adoption ofregulatory requirements that give in-centives for banks to use more tradi-tional forms of funding, moving awayfrom a reliance on risk-adjusted capi-tal requirements, implementing a fi-nancial stability contribution forSystematically important FinancialInstitutions (SIFIs), as recommendedby the European Commission to helpprevent the “too big to fail” scenario,and improving transparency on riskexposures.

“We need investment to go back tothe real economy, and close down thecasinos,” says Lamberts. “Regulation isnot going in the right direction. Espe-cially with loony people like Merkeland Sarkozy in charge”.

Olli Rehn, the European Commissioner for Monetary Affairs,announces the interimeconomic forecast for 2011-12 on 15 September 2011. A new report commissionedby the Greens asks to what extent the banking system is responsible for the financialcrisis. | EPA/OLIVIER HOSLET

BANKING

Banking sector needs to be adjustedin line with economy, report

BY Cillian Donnelly

Page 6 | New Europe NEW EUROPE


“Number of Americans inpoverty at highest in 50 years”,said the Financial Times (FT)headline of 14 September. “In2010, 46.2 million (15.1%) peo-ple fell below the poverty line. Itis probably the highest percent-age ever as 50 years ago the col-lection of data only commenced.”The article continued.

Empirical studies have provenbeyond doubt that there is astrong connection between self –sustaining investment dynamismand “creative destruction” in un-regulated markets. Such destruc-tion of already invested capitalthrough innovation provides thebasis for ever new investment.

But, the more capital intensivean investment in machinery hasbeen, the bigger the resistance todevalue such, which also givesthe ever small amount of playersmore and more power to make itimpossible. Stagnation is theconsequence.

This problem for the first timeoccurred at the beginning of the20th century. Out of hundreds ofsmall competitors a few market-dominating major corporationsthat linked the capital – typicalunsaturated demand for profitmaximization to the power to di-rect investment decisions andalso political power.

Markets now were dominatedby a few dozen of major suppli-ers, who behind closed doorsfixed prices and secured theirmarket shares leaving out anynewcomers with innovativeproducts. Under these circum-stances capital becomes veryconservative and no “creative de-struction” is happening anymore.New technologies are only enter-ing the market if the majors takethem over which they of courseonly do once the old ones arewritten off.

But, in all fairness, one has tosay that this dreadful oligopoly-development could hardly bestopped politically or by an ad-vanced merger-control con-stantly unbundlingconglomerates because at the be-ginning of the 20th Century ithad been technological require-ments itself that especially in thefield of heavy industry as well aselectronics or chemicals needed a

capital minimum to enhance thedevelopment. Technically, it hadto be either big or it wouldn’thave been possible at all.

A market, however, that re-quires a high capital minimum toparticipate is not an open marketas any newcomer had no chanceat all.

Already at the beginning of the20th century the growing marketconcentrations of ever fewer sup-pliers resulted in exactly thesame reactions we know from therecent years in which investmentdynamism and the process oftechnological innovation is slow-ing down dramatically.

Instead more and more capitalstreamed onto the financial andstock markets. Market value ofAmerican stocks multipliedmany times between 1924 and1929 while the ordinary capitalgoods stock grew only modestly.Growth and profits that couldnot be increased by the real econ-omy any longer were simulatedby speculative gains.

But because, unlike today, inthe back-then-days banks had nomoney-printing machine in theirbasements by which they couldcreate endlessly liquidity out ofnothing the snowball systemreached its limits pretty soon. In1929 the mega-blasé burst andprofits collapsed like an ‘Apfel-strudel’ in the microwave, result-ing in the worst economic crisis

ever, regimes of repression, fas-cism and ultimately WWII.

After WWII, capitalism man-aged, in industrialised countries,to regain for two decades it’s olddynamism because the demandfor investment kept up for an un-usual and historically unprece-dented long phase, allowingprofits to constantly be re-in-vested. One reason for this wasthat WWII destroyed economiccapacity in Europe, which re-sulted in a huge demand for re-construction.

The second factor that playeda significant role was the factthat, because of it’s dark history,capitalism was completely dis-credited and in order to be ableto continue to exist capitalismwas willing to compromise a bitand allowed for some social reg-ulations such as wages that werein line with the raise of produc-tivity, a social security networkand by this, a stabilising purchas-ing power.

Steadily increasing wages andsocial expenditure could onlycontribute to the economic dy-namism because a third factorcame into play: the “S-curve” asthe suddenly rising consumptionindustry is referred to. Massproducts such as fridges, dishwashers, TV sets, and cars be-came the standard even forworking class people. The rapidlygrowing demand required huge

investments and carried theeconomy for over two decades.

But, once all production siteswere built and all households hadfridges, dishwashers, cars andTVs, the curve that had pointedstraight upwards bowed a bit,and by this, the requirement forinvestment leaving over-capaci-ties behind. Profitable invest-ment opportunities became rareand by this also the profit rates.

This situation, and not the oilprice shock, had been the reasonfor the world wide economicdownturn in the 1970s. Follow-ing this, in most countries neo-liberal concepts were appliedwhose diagnosis of the reasonsfor the crisis culminated in theassumption that the profit sharein the income, the cake had got-ten too little.

The only goal of the neo-lib-eral doctrine was to increase theprofit share again, which led to adreadful cycle of de-industriali-sation, while rich became richerand ordinary citizens poorer.

But, to have social democraticgovernments like the one ofGerhard Schröder and TonyBlair go with a chainsaw in theirhands through the social net wasnot enough. The shareholdersand owners of major corpora-tions wanted the profit share toever grow bigger.

That’s why the average wageshare had to decline further

along with ever poorer socialbenefits.

Although the ‘Basic Law’,West-Germany’s post WWIIconstitution that had beenadopted by the united Germanyin 1990, guarantees a social prin-ciple, the social contrasts intoday’s Germany are larger thanduring the German Kaiser-Reichbefore WW I.

The share in the income-cakefor the bottom 50% of popula-tion in 1913 had been 24% buttoday only 14.9% of all income isshared by bottom half of Ger-man society. While in 1913 therichest 10% of Germans ac-counted for 40% of income it istoday only 1% that owns 23% ofall income. In the US a similardevelopment can be observed: ofevery Dollar by which the in-come in the US had grown be-tween 1976 and 2007, 58 centsended in the pockets of the ultra-rich 1% top of society. The bot-tom 60% in the US account foronly 21% of income.

But, not only in a relative way,also in absolute figures the gen-eral standard of living declinesfor the vast majority of citizens.The average real net wage of anemployee in Germany in 2006was tumbling at around the levelof 1986. In other words, 20 yearsof economic development haveby-passed the majority of people.

In the real economy a constantde-industrialisation can be as-serted. The share of manufactur-ing business in the generaleconomic data in the US hadbeen in 1989 some 17%, in 2009it was only 9% of people whowere employed by industrialcompanies.

Not much better is the UnitedKingdom. In 1997, when “NewLabour” under Tony Blair tookover from the Tories, the Britishindustries still contributed 20%to the UK’s GDP. At the end of2009 this share has fallen to 11%.

Instead, the financial sectorwas booming. These shifts arenot primarily owed to automatedproduction and technologicalprogress but are the result of thewrong economic priorities and alack of industrial investment.

Ralph T. Niemeyer is the Editor-in-Chief of €U chronicle ([email protected])

DEJA-VU

Socialism got crippled by Centralisation,Capitalism by Concentration

Activists pushing for a financial transaction tax outside the European Parliament.|BENOIT DOPPAGNE

By Ralph T. Niemeyer

ANALYSISNew Europe | Page 7

NEW EUROPESeptember 25 - October 1, 2011

Sometimes it is the softly-spoken whocan be the most dangerous. Olli Rehnis a case in point.

A few months ago, Ireland’s EUcommissioner Máire Geoghegan-Quinn made this observation aboutRehn’s initial handling of the financialcrisis in her country (and mine): “Thiswas ‘Mr Nasty’ coming in to tell theIrish people and the Irish governmentwhat to do. And then suddenly, hegave an interview on television andpeople said, ‘This guy. Mr Nasty?’ Itdoesn’t fit with the man at all. He ex-plained everything in a very reason-able way.”

Rehn may be an affable bloke. Butas the Union’s economic policy chief,he is implementing measures thathave nasty consequences.

I have obtained copies of the brief-ing notes that Brussels officials pre-pared for Rehn when he waspondering what should be done aboutIreland in 2010 and the beginning of2011. The stench of arrogance andcallousness from these papers is over-powering.

Right now, I am reading a “scenesetter” that Rehn perused before aNovember meeting with Irish oppo-sition leaders and “social partners” (asrepresentatives of bosses and workersare called – misleadingly – in Brus-sels parlance). It dismisses a call bytrade unions to extend the 2014 dead-line by which Ireland has been en-joined to bring down its budget deficitto within 3% of gross domestic prod-uct (GDP). “Even if this was politi-cally feasible, it would be anarithmetical impossibility,” the docu-ment says. “Financial markets willsimply not allow Ireland to kick thecan further down the road.”

I’m not a huge admirer of Ireland’strade union leadership, mainly be-cause it has been too eager to curryfavour with the powerful. But the EUofficials’ attitude of “we know best” isdisgusting. The deficit limits they re-gard as sacrosanct are the result of ar-bitrary criteria that make sense onlyto the German government and itsslavish followers in the Commissionand the European Central Bank.

It is also significant that another in-ternal Commission document contra-dicts the line from Rehn’s team. Thissecond document is a briefing noteprepared for a meeting between JoséManuel Barroso, the institution’s pres-ident, and Klaus Regling, head of theEuropean Financial Stability Facility(the “bail-out” backstop for eurozonecountries), in December. It says that

the 3% deadline should be postponedto 2015 as this would be a “more cred-ible target”. Something that was an“arithmetical impossibility” less thana month earlier became feasible with aclick of the fingers.

A third paper indicates that a gen-eral election held in Ireland duringFebruary this year was essentiallyfought on lies. The centre-right FineGael, which emerged as the largestparty after that poll, promised votersthat it would “burn the bondholders”and that Irish banks would not receiveanother cent from the state until theyimposed losses on creditors. Yet theCommission’s document, dating fromJanuary, suggests Brussels had alreadytold senior figures in Fine Gael to ruleout that option. “A possible involve-ment of banks’ senior bondholders(‘haircut’) has been excluded andrenegotiating this would run counterto the progamme’s main objective –restoring confidence in the Irishbanking sector,” it says.

The most disturbing thing aboutthe 11 internal documents I’ve seen ishow they call savage cuts to social ex-penditure “appropriate”, without reg-istering a smidgen of concern for thepeople affected. The cuts are provingespecially cruel to children with learn-ing difficulties. A report shown by thenational broadcaster RTE recently il-lustrated how one school in Wexford– a county in the south-east – has lostfive special needs assistants. That storyis being replicated across Ireland,hampering children from learning themost basic skills such as the ability towrite their own name.

It is a tenet of elementary justicethat nobody should be punished for acrime he or she did not commit. Whyis Olli Rehn punishing Irish children

for a crime of which they are entirelyinnocent? And why should educationbe hit at all? Even during its “CelticTiger” boom, Ireland was spendingproportionately less on schooling thanthe average for industrialised coun-tries, according to data from the Or-ganisation for Economic Cooperationand Development.

If Rehn’s team had been a littlemore thorough in its research, itwould have realised that despite Ire-land’s problems, the country still hasa fair amount of wealth. MerrillLynch (now Bank of America’s wealthmanagement division) has calculatedthat the country had 19,000 “high networth individuals” (HNWIs) last year,a rise of 5% from 2009. HNWIs arepeople with over $1 million in “in-vestable assets”.

It is striking that the Irish Businessand Employers Confederation(IBEC) has been demanding all kindsof measures that hurt ordinary people.It has demanded the scrapping of theminimum wage, downsizing of thepublic sector and reform of social wel-fare to “incentivise” work. Yet IBECand its chums in the Irish governmentand the Brussels institutions won’tcontemplate going after the rich. Whycan’t a limit be set on the amount ofmoney people can have, so that theyare required to hand over anythingabove that limit to the exchequer?

Paul Krugman, the economist, lastweek compared Europe’s austerityagenda to bloodletting. Doctors nolonger believe that patients can behealed by draining their blood; theywill just get weaker. The same goes foreconomic management, yet Rehn andthe blinkered bureaucrats around himare continuing to prescribe medicinethat simply doesn’t work.

ECONOMY

Dublin treated with double standards by Brussels elite

Pedestrians walking past the Bank of Ireland in Dublin, Ireland.|EPA/ANDY RAIN

By David Cronin

The EU-India relationship holds significant strategic value andgeopolitical weight, but much potential remains untapped. Sofar, leaders have been unable fully to build on the commonalityof values and global aims to deliver a truly remarkable strategicpartnership between what one might call natural partners. Whilepeople-to-people contacts are thriving with a booming tourismindustry, on a political level a certain malaise exists. Bilateral re-lations are lacklustre, and one hardly ever hears of the EU-Indiastrategic partnership having made an impact on multilateral af-fairs. The most ambitious of the EU and India’s bilateral under-takings – a free trade agreement (FTA), counter-terrorismcooperation, maritime cooperation and a civil nuclear energyagreement – remain in abeyance. There is a real and urgent needfor changing thought-processes on both sides if a truly profitablepartnership is to be realised. Four key problems can be identi-fied:1) The relationship is essentially centred around summits whereleaders from both sides gather once a year to exchange formali-ties and a few deliverables. The focus should instead be placed onday-to-day work processes, which remain trifling. Summits donot permit much discussion at length.2) An abyss of understanding separates the two. The EU wouldlike to see itself more as a political actor than as a trading partner,besides seeing India principally through the glimmer of emer-gence. This is a hollow approach, since trade does form the back-bone of the relationship and India still has more poor people thanthe entire African continent. Rather, the EU should considerwhat kind of trading partner it aims to be – bilateral or multilat-eral. For its part, India fails genuinely to understand the intrica-cies of the European Union and what it can deliver. For India, theEU signifies Europe as a whole and hence New Delhi expects thesame from the EU as it does from big individual players like theUS, UK or France.3) The EU and India must identify a mutually-beneficial limitedlist of three or four priorities for the upcoming years. The 2008Joint Action Plan is an exhaustive wish list with no link to im-plementation targets. While the EU’s priorities are trade, energy,security, multilateralism and climate change, India would like tosee more cooperation on agriculture and vocational training, andtechnology transfer at affordable rates that will help lift millionsout of poverty.4) Lastly, political will is crucial to garner full potential from therelationship. Political contact on both sides remains weak andmust be boosted. Indian leaders’ failure to make an appearance inBrussels during the rest of the year and the absence of an EUfriendship group within the India Parliament is starkly noted.Intra-EU member state priorities vis-à-vis India differ and mem-ber states prefer to engage with India bilaterally.As negotiators meet in Brussels for the 15th round of negotia-tions (12-14 September), it is essential to bear in mind that theelusive FTA can be a redeemer. The Federation of Indian Cham-ber of Commerce and Industry approximate bilateral trade toreach 572 billion dollars by 2015. While New Delhi is keen onbuilding upon what is possible, the EU will accept nothing shortof an ambitious deal. At a time when Europe is in much need ofjobs and growth, a less than perfect FTA could also re-boost theeconomy. Emerging India could be Europe’s gateway to Asia,given India’s massive drive for reintegration into Asia’s economicvortex through a seamless web of FTAs. The EU-India strate-gic partnership has limitless potential, but potential must be builtupon consciously. Much can be hoped from the forthcomingEU-India Forum (27-28 September, New Delhi), which willgather the intellectual and diplomatic community from bothsides and is expected to add a fresh jolt to relations.

Gauri Khandekar is a junior researcher at Fride.

New Europe content partner

Boosting the EU-India strategicpartnership



The Porter effect

Europe is facing in this 2011 Year new challenges for thefuture and the lessons from Harvard Professor MichaelPorter are very clear. In a time of uncertainty and uncon-trolled global financial crisis, Europe must focus more andmore its attention on launching the basis for a New Strate-gic Agenda centered in the drivers of high growth rate andcivil society capacity of creating and developing addedvalue for the international market. More than ever, we needto develop colectively this Porter effect.The effectiveness of the Porter effect is based on a strongercoordination among the different partners towards action:- Develop active policies towards the participation of SMEin global networks;- Reinforcing the role of “Clusters of Innovation” as Cen-ters of Excellence for new areas of knowledge (biotech, re-newables energies, new communications);- Reinventing the role of Universities as active players inthe development of a culture of competitiveness amongcivil society;- Enabling the States to progressively eliminate obstaclesto investment and innovation;The launching of the New Europe 2020 Agenda is a goodexample of this new strategic vision for a new agenda of ex-cellence. But it´s not enough. It must be effectively com-plemented with an active participation of policymakers indisseminating the new message for the future. The Portereffect will be an effective and strong enabler to the socialand economical development of the institutions and thecitizens. That´s why we need new programs, new answers,new solutions.In this way, the extremely positive experience of integratedprojects like the “Poles of Competitiveness” and Clusters ofInnovation across the different regions should be replicatedin other European countries. It allows – as it can be con-firmed by its results – a very strong commitment betweenthe implementation of a global national economic strategyand specific areas of regional development, which is nowconsidered by the European Union as a key enabler for thefuture.This new economic strategy demands an effective Part-nership Contract between all the actors (States, Universi-ties, Companies, Civil Society), in order to build a realStrategy of Confidence in the implementation of the dif-ferent policies. The focus on Innovation and Knowledge asthe drivers of creating added value with international dis-semination is a unique challenge that may be the answer toa new way of interaction between those who have the re-sponsibility of thinking and those that have the responsi-bility of producing goods and services.It´ s time to believe in a new cycle for Europe. Reinventingthe Lisbon Agenda and giving the European Actors (States,Universities, Enterprises, Civil Society) the opportunity ofdeveloping new challenges focused on innovation and cre-ativity is in a large sense giving a central contribution to thereinvention of Europe. The Reinvention of Europe will bepossible if based in this Porter effect. For that, all of us willhave to give our individual and collective contribution.

Francisco Jaime Quesado is the General Manager of theInnovation and Knowledge Society in Portugal, a publicagency with the mission of coordinating the policies forInformation Society and mobilizing it through dissemi-nation, qualification and research activities. It operateswithin the Ministry of Science, Technology and HigherEducation

New Europe content partner

LONDON - The pressure welled up fur-ther this last week over the fear of anothercredit crunch. Each day seemed to increasethe expectation for a final eruption fromStromboli to tear apart the increasinglynervous and fragile Eurozone banking sys-tem. This financial charade seemed to bebeing played out as the politicians wereseen to be continuing to dither about tak-ing decisive decisions, with accusationsbeing lobbed around the world with ahowitzer of hyperbole coming in fromChina and the US. Finally we heard of thecombined intervention from five centralbanks and at last it seems that we could beseeing some significant action to try and atleast ease the pressure for the time beingand give further confidence to some of themost worried banks under pressure.

This however buys time – just a fewmonths, but vital time for nerves about thebanks to calm down and ease the liquiditysituation and prevent a further crampingof inter-bank finance. It does not in itselfthough resolve the underlying issues ofcurrency management and confidence.

A few days on from the publication ofthe Vickers report, you cannot have had abetter justification for ring-fencing ofcommercial and investment banks thanthe UBS trading losses. The report itselfdid not seem to identify a key issue that hasalways been my concern – that of culture.Having worked in both, I see a funda-mental difference between the two; thecommercial bank (or clearing bank) as aservice bank designed to service theirclients. The investment bank essentially fo-cused on primarily serving itself. Obviouslythe division is simplistic but the culturaldifferences frankly have been clear for allto see. Such a division though would neverhave prevented the last crisis, as of coursewe can see where the commercial bankswith their service? Frankly failed abysmallywith bad loans by bad bankers and inex-perienced regulators. As examples we justhave to look at HBOS – virtually runninga form of high risk private equity com-mercial banking system and the failure ofthe Northern Rock mortgage regime.

However, the UBS trading loss serves toremind us of the trading risks. As ever it iseasy to blame the primary culprit of course,but it must also be the failure of disciplines,controls and culture within the businessthat allows such disasters to occur.

Oh and whilst the world is wallowing inits slough of despond perhaps I can at leastidentify one shaft of light in the seeminglyleaden gloom.

One of the peripheral Eurozone nationsis showing some positive news. Yes, despiteeveryone’s enthusiasm to cast gloom every-where, the Irish economy is showing signsof growth. Now of course the problem is

not yet resolved but the pain and loss theyhave been through is finally bearing somefruit. Next week we should get some GDPnumbers

which I have every hope will continuethe positive news. God save Ireland – wellHe might just have done so.

Workshop of the world? Well maybenot as much as before. There has beensome interesting data coming out fromChina which is showing the first visibleshift in manufacturing production awayfrom home. The old tag of “China Price” asa term to describe the cheapest cost of pro-duction in the world may no longer bequite as accurate as it once was. “ChinaPrice” is rising. The effect of this has beento see the percentage of imports of lightmanufactured goods coming from Chinato both the USA and the EU havemarkedly dropped by several percentagepoints. Examples are appearing ever morefrequently of low cost manufacturers inSouthern China looking to move manu-facturing overseas. The reason? Wage rises.Higher levels of some 20% per annumhave been quoted, with a view that wageswill double over five years and maybe in aneven shorter time frame than that. Muchof this seems to have been driven as a re-sult of the horrific series of suicides at theelectronics manufacturer Foxconn last year,which quite rightly drew attention to someof the apparently frightful practices andpressures that the workers were under.

However, it has not been just the wagesthat have been the issue. The perennialquestion of China?s demographics has alsosurfaced. It seems that the numbers ofyoung workers due to be coming into em-ployment has been declining quite sharplyover recent years. An additional issue hasbeen the mis-match in the sexes as manycouples have been having abortions of fe-male foetuses preferring to have male ba-bies, and although this has been a muchmentioned issue over the years, it is nowstarting to have the effect of far lowernumbers of female factory workers being

available. In what used to be a predomi-nantly female dominated environment,factory production now has a ratio inSouthern China of around 60:40 in favourof males. So where is this “off-shoring” ofChinese manufacturing going? It seemsthat other low cost countries are now ben-efitting from China’s rising difficulties.Bangladesh has seen a rise in exports to theUS of 19% and Vietnam some 16%.However, to see this as the end of China’sstrength in this area would be to ignoreother factors. China’s huge hinterland willcontinue to attract further manufacturersas they seek lower costs - and there is a lotto absorb. Equally as the Chinese experi-ence has developed their quality standardshave risen, especially compared to some ofthe other cheaper overseas producers. Timethen for the others to up their game andto reduce their “reject” rates.

And finally some news from last monthbut still worth a mention. A fine story ofthe vital need for positive leadership beingneeded at all times. A Finnish ferry re-cently ran aground while its captain wasstuck in the bathroom.

One member of staff managed to slowthe island-hopping tourist ferry down, butthe vessel, carrying 54 passengers, slammedonto a rock near the shore of Helsinki, theFinnish coastguard said.

The captain got stuck in the bathroombecause of a jammed lock and yelled forhelp, the coastguard said.

Some passengers were bruised andtableware was broken in the incident. Thecoastguard is investigating whether thecaptain's actions amounted to criminal en-dangerment.

"He was stuck in the toilet. As soon asthe staff member got the door open, it wastoo late," said Jan Sundell, head of investi-gation. So the moral is that we must learnto lead from the front and not from the loo.

Justin A. Urquhart Stewart is the Direc-tor of Seven Investment ManagementLimited

ECONOMY

A Vickers Validation?

Suspected rogue trader Kweku Adoboli (C) leaving the City of London magistrates court, inLondon, Britain, 16 September.|EPA/STR

By Justin A. Urquhart Stewart

By Francisco Jaime Quesado

Since the Turkish invasion in 1974,Cyprus has been striving to defend themost obvious and evident: respect forits sovereignty, respect of human rightsand a just solution to the Cyprus prob-lem.

As an independent state, member ofthe EU and the UN, the Republic ofCyprus has the right to independentlydetermine its interests, alone or in co-operation with other countries. Fur-thermore, as one of the 162 stateparties of the United Nations Con-vention of the law of the Sea (UNC-LOS), it can carry out, any activities inorder to explore and exploit potentialhydrocarbon reserves in its ExclusiveEconomic Zone (EEZ), a zone thathas been established in 1993 and pro-claimed in accordance to customaryinternational law.

Turkey however, continuously andarrogantly launches a multitude ofthreats against Cyprus. Recently, in aneffort to intimidate and prevent thelawful Republic of Cyprus, from pro-ceeding with offshore oil and gasdrilling in its EEZ, Turkey has threat-ened, openly and blatantly, that Turk-ish Cypriots will launch their ownexploration bid, by finalizing a delin-eation agreement with Ankara to fa-cilitate future oil and gas exploration.Moreover, Turkey expressed its inten-tion in sending warships in the EasternMediterranean region, in an effort toillegally declare a border, thus aggra-vating relations with Greece. At leastten Turkish navy boats appeared re-cently in the sea area between theGreek islands of Rhodes and Kastel-lorizo, where Ankara pretends to havehydrocarbon rights.

Turkey’s provocative statements,such as: “Greek Cypriots’ ‘unilateral’exploration and drilling would ir-reparably damage already-falteringreunification talks”, or Erdogan’sforceful declarations that "Turkeyplanned to beef up navy patrols in theregion and secure free navigation ofthe seas", or even Davutoglu’s“Turkey will show the appropriate re-action if any further steps are taken”,clearly indicate that Turkey behavesas a regional ‘troublemaker’. It showsno respect to the provisions of theUnited Nations Convention of thelaw of the Sea (UNCLOS), while itsprovocations aim to build up its navalpresence in the area in an effort toplay a leading role in the Aegean, theEastern Mediterranean and the Arabworld.

Potentially causing a potential ten-sion, Turkey cultivates a negative cli-mate, not at all conducive to a

settlement to the Cyprus issue, whileit destroys any good neighbourly rela-tions. Turkey’s so called “zero problemneighborhood policy” has collapsed,while Davoutoglu's strategic depthpolicy is implemented, no matter atwhat cost.

The Republic of Cyprus however,will not be bullied by Turkish threats.As an independent state, it has sover-eign rights over its EEZ and it is thelegitimate authority, internationallyrecognized, to represent the people ofCyprus as a whole, including the Turk-ish Cypriots. If hydrocarbon reservesare verified, their exploitation will ob-viously benefit both Greek-Cypriotsand Turkish-Cypriots alike.

Turkey must therefore be pressed bythe United Nations, the U.S.A and theEuropean Union to modify its de-meanor to one that secures peace andnormalcy in the region and that in-spires confidence and trust to theGreek-Cypriots. It must be pressed torecognize the Republic of Cyprus ac-cording to Protocol 10 and moreoverit must sign and implement the UnitedNations Convention of the law of theSea (UNCLOS).

On behalf of the EU, Mrs Maja Ko-cijancic, spokeswoman of EU's HighRepresentative for Foreign Affairs andSecurity Policy, during a recent inter-view, announced the Commission'spress lines on the subject as follows:

"In line with Council conclusions,most recently of December 2010, theEU urges Turkey to refrain from anykind of threat, sources of friction or ac-tion, which could negatively affectgood neighbourly relations and thepeaceful settlement of border disputes.The Commission regrets any state-ments that are not conducive to thisobjective. It regularly reiterates theseissues in its discussions with Turkey

and will continue to monitor Turkey'scommitments... Moreover, the Coun-cil of Ministers has repeatedly under-lined the importance of progress in thenormalization of relations betweenTurkey and all EU Member States, in-cluding the Republic of Cyprus. Fur-thermore, the EU has stressed all thesovereign rights of EU Member Stateswhich include entering into bilateralagreements, in accordance with theEU acquis and international law, in-cluding the UN Convention on theLaw of the Sea. The Commissionwould like to underline once again theurgent need to reach a comprehensivesettlement of the Cyprus issue. Aheadof the crucial phase of Cyprus talks thisautumn, it is essential that all partiesconcerned exert restrain and do theirutmost to ensure a positive climate thatwill facilitate a successful completionof the process".

Turkey is being tolerated in its exer-cise of state terrorism against a state al-ready member of the EU and whoabides by international laws and inparticular the law of the Sea. In theface of this noticeable lack of peacefuland cooperative intentions, we dowonder how Turkey can remain a can-didate country who wishes to becomea member of the European family. Itsaggressive conduct should be com-pletely halted with a unified front ofsolidarity for Cyprus, which wouldsend a clear and firm message thatTurkey needs to abide by internationallegality and its obligations to the EU.

EU is asked to show, practically, itssolidarity to one of its member states,namely, Cyprus.

Antigoni Papadopoulou, MEP, is amember of the Group of the Progres-sive Alliance of Socialists and Democ-rats in the European Parliament

ANALYSISNew Europe | Page 9


Saying nothing doesnot add up to a political manifesto

Silence does not necessarily amount to culpability, butsometimes the cynical mind can’t help but make an explicitconnection. When questioned about his past this week,Martin McGuinness continued to remain silent on whetheror not he ever ordered a killing during his time as a mem-ber of the Provisional IRA. He also claims to have left therepublican terrorist organisation in 1974, and that he neverkilled anyone himself. He says there is much he regretsabout the years of violent conflict in Northern Ireland, andthat he wants to continue his role as a peacemaker, despitehis obvious association with the period’s most brutal para-military group. He says he “shocked the world” with the tra-jectory of his political career. The reason for all this, is that McGuinness is set to run asthe Sinn Féin candidate in the presidential elections in theRepublic of Ireland, a normally prosaic event, enlivened thistime by the inclusion of the former IRA man, who currentlyserves as Deputy First Minister in the Northern IrelandAssembly, as well as the on-off-on-again candidature ofSenator David Norris, which polls suggest is McGuinness’biggest rival in the popularity stakes. So far (admittedly, the campaign doesn’t really begin untilnominations close on 28 September), he has been getting adisproportionate amount of media attention. The McGuin-ness campaign has all the fascination of a spider’s web; it’sglistening, well-made and attractive on one level, but has adark heart. The media right now are prodding away at thepast, but without any real expectations; the peacemaker lineseems to be the accepted narrative. But, like Jay Gatsby, thepast is always bobbing away, nudging the present. Whatwent before is not always so difficult to eradicate. Sadly, the Irish electorate seem to be in a funny mood, aforgiving mood. Shorter memories push McGuinnessforward, he has somehow become the alternative candi-date, the anti-establishment candidate, despite the obvi-ous fact that the office of president is nothing if not thesupreme representative of the state. All of which meansthat the President of Ireland, as head of sate, must carrythe desired amount of diplomatic and ceremonial weightas demanded by Irish citizens to welcome foreign digni-taries to the land; the British monarch, for instance,whose visit to Dublin in May this year was opposed bySinn Féin and its supporters. The Irish president is also the head of the police and de-fence forces, both of which have been explicitly denouncedby republicans, who consider them to be representativesonly of one side of a divided nation. In the past, membersof both the Irish army and police force were considered le-gitimate IRA targets, traitors to the republican ideal. ForMcGuinness to be titular head of those organisations re-quires a reversal of those principals, an admission of the fal-libility of republican ideology. Maybe, though, he will keepsilent on the issue, just like on those other sticking points.McGuinness and his team know all the arguments by now,and how to dodge the questions; but that doesn’t meanthose questions are irrelevant. There are still answers to behad from the republican movement. Will a Sinn Féin pres-ident end those lingering perceptions about the party, andrepublicanism generally? Securing the presidency will cer-tainly embed the party in the centre, establishing its main-stream credentials and obliterating its outsider status, whileexposing itself to the same kind of scrutiny that all politi-cal organisations deserve. Silence is a tactic that cannot bemaintained for much longer.

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EVERYTHING BUT ARMS POLITICS

Turkish threats against Cyprus

Cypriot President Demetris Christofias (R) shaking hands with Turkish Cypriot leaderDervis Eroglu (L) in the framework of direct talks at the United Nations Protected Area inNicosia, Cyprus, 08 September.|EPA

By Antigoni Papadopoulou By Cillian Donnelly



Events continue to twist and turn inthe Irish presidential elections aheadof the 28 September deadline for thefinal declaration of candidates.

So far, five candidates have securedenough support to officially declarethemselves candidates, with anothertwo desperately trying to gather thekind of last minute support that mayenable them to make a late bid for thepresidency.

In order to secure a place on theballot paper, prospective candidatesmust secure the signatures of at leasttwenty members of the Oireachtas(combined upper and lower houses ofparliament), or the support of at leastfour local councils. So far, those as-sured of candidature are GayMitchell, current MEP for Dublinand member of the ruling Fine Gaelparty, Michael D Higgins, from coali-tion partners, the Labour Party, SinnFéin’s Martin McGuinness, and in-dependents Mary Davis, best knownfor her campaigning work on disabil-ity rights, and entrepreneur Seán Gal-lagher.

Also seeking nominations are in-dependent Senator David Norris andformer MEP and 1997 presidentialcandidate, Dana Rosemary Scallon(who, as Dana, had previously been aEurovision Song Contest winner in1970).

Unusually, Fianna Fáil, the partythat has dominated the presidencysince its creation in1938, have decidednot to contest the election this timearound, despite a few ripples of intent,following a major collapse in the par-liamentary elections in February,which saw the party fall to a new lowof 17% of the vote, and securing only20 Dáil (parliament) seats. Followinga meeting on 20 September, the partypassed a resolution that its members

were not free to nominate other can-didates. This is seen as a large blow toboth Scallon and Norris, both ofwhom were hoping to pick up votesfrom the party’s parliamentarians andsenators. The episode has also some-what undermined the thin credibilityof leader Micheál Martin, who hasbeen criticised for his indecisive han-dling of the affair, and allowing theparty to have its internal divisionspublicly exposed.

The barring of Fianna Fáil mem-bers to sign the nomination papers ofnon-party candidates could be seen asa tactic to frustrate the presidential as-pirations of Norris, who as an earlyfrontrunner, was forced to pull out ofthe race in early August after itemerged he sent a letter to the au-thorities in Israel seeking clemencyfor his former partner, Ezra Nawi,who was facing a charge of statutoryrape. Norris had earlier dodged somecontroversy over a decade-old inter-

view in which he gave his opinions onpaedophilia, however, this wasdeemed a controversy too far. Then,following a much-touted media in-terview on 16 September, he an-nounced his intention to run again.

Previously, despite scoring high inopinion polls, he had some difficulty insecuring the minimum amount ofnominations, especially from localcouncils, and the negative media atten-tion has contributed to fluctuating sup-port amongst Oireachtas members.However, owing to renewed lobbying,Norris has clawed his way back tobeing just three signatures away fromnomination. It will certainly be an in-tense last few days of campaigning.

Taking over from Norris as themedia favourite, if not necessarily in apositive way, is Martin McGuinnessfrom Sinn Féin. McGuinness, whocurrently serves as Deputy First Min-ister in the Northern Ireland Assem-bly, is one of the party’s biggest and

most respected personalities, andSinn Féin will be hoping to capitaliseon their biggest electoral success todate in the Republic, securing around10% of the vote and winning fourteenDáil seats; and combined with threeSinn Féin senators, plus the supportof four independents, McGuinnessmanaged to nudge past the nomina-tion threshold. There had been long-standing speculation about whetheror not Sinn Féin would field its firstpresidential candidate this timearound. The presidential rem of officewill cover 2016, the 100th anniversaryof the 1916 Easter Rising, an eventsacrosanct in republican ideology, andspeculation was that the party wouldtry its hardest to secure the office ofthe head of state. Initially, this specu-lation centred around party presidentGerry Adams, however since winninga parliamentary seat in February,McGuinness is seen as the obviouschoice.

Since assuming his role in theNorthern Ireland peace process, andin the Stormont assembly, McGuin-ness has acquired a lot of respect andcredibility for his political skills, earn-ing the respect of one-time adver-saries, and graduating to somethingakin to an international statesman.However, he is a figure not withoutcontroversy. He is candid about hispast as a leader in the ProvisionalIRA, something which still grateswith many in the Republic, and a re-cent interview in which he claimedto have left the IRA in 1974 has beenscoffed at by opponents. It will cer-tainly be an issue on the campaigntrail. The question is, will his past besignificantly forgiven by the elec-torate? It certainly looks as if SinnFéin has enough core support tomake an impact on proceedings, andwith the absence of a hard left candi-date, there is also scope for McGuin-ness to pick-up some transfers (theelection is run on a PR-STV system).However, at this stage, this does notlook a powerful enough combina-tion to secure what would be a his-toric victory.

Of the two front runners, GayMitchell and Michael D Higgins, thelatter will more likely suffer from theentry into the race of McGuinness,whose party will target urban work-ing-class areas. He is, however, moretransfer-friendly, and could benefitfrom second preference votes fromMitchell, and unlike his main com-petitor, he is more popular in ruralareas. Mitchell will be hoping thatFine Gael’s exemplary showing in thegeneral election will carry himthrough. Media reports are that hiscampaign so far has been a bit low-key. However, with the real fight onlyset to being once nominations areclosed, no one is making any rash pre-dictions just yet.

Martin McGuinness, who has been nominated as the Sinn Féin candidate in the upcoming presidential elections in Ireland. Willvoters forget his violent past, however? |EPA/STF

POLITICS

Candidates lining up in Irish presidential elections

“Beer is proof that Godloves us and wants us to behappy,” said BenjaminFranklin, one of America’sfounding fathers. Perhapsthat is why the humbledrink has been part of Eu-ropean culture for thousandsof years, as Plato, the Greekphilosopher mused, “He wasa wise man who invented

beer.”Europe’s brewers gathered

in Brussels to raise a glass totheir product and to stressthe health benefits of mod-erate consumption at a sym-posium on beer and health.The public perception ofbeer is that it isn’t as goodfor you as wine, somethingthe brewers and a growingnumber of scientists dispute.

The beer makers and sci-

entists stress that any bene-fits can only be found withmoderate drinking behavior.“Moderate consumers havea lower risk of mortalitythan both abstainers and ex-cessive consumers” said Prof.Frans Kok, head of the Di-vision of Human Nutritionat Wageningen University,Chair of the Symposium. “Itis important to emphasisethat beneficial effects are

conferred only by moderateconsumption and that thepattern of consumption andthe associated diet andlifestyle are also important,”he added.

Some felt that the beerproducers were affected byreports of beer being linkedin the public’s mind to alco-hol abuse and a form ofsnobbery, where other typesof drinks had built a more

up market image, one that isat odds with the more egal-itarian appeal of the thou-sands of varieties of beer onthe market.

Pierre-Olivier Bergeron,Secretary General of TheBrewers said, “It is impor-tant for policymakers tohave the full picture whenconsidering approaches totackling alcohol misuse.”Bergeron also told New Eu-

rope, “We call upon healthpolicy makers to ensure thatthey do not just pay lip-ser-vice to the need to focus onalcohol related harm, butthat they also focus on poli-cies that target alcohol mis-use rather than increasedtaxation and further market-ing restrictions that by theirnature hit the whole sectorand all consumers, includingmoderate beer drinkers.”

FOOD & DRINK

Culture in a glass Beer is good for you, after all

By Cillian Donnelly

By Andy Carling

SAO PAULO - Brazil is seen as acountry of diverse and profound faith.But though religion is an importantreference point in the lives of the pop-ulation, the extent of religious diver-sity in this sprawling country is notnearly so pervasive as belief itself.

Though globally, the image of Brazilis connected to African traditions andreligions, looking at the 2000 censusdata, the Brazilian sociologist FlávioPierucci found that Brazil is, in reality,a Christian country, indeed, perhapsthe largest Christian country in theworld. 73,8% of the population callsthemselves Catholic, 15,4%, evangeli-cal; a total of 89,2 % of Christian peo-ple. A mere 0,3% of the populationidentified as adherents of the Africanreligions Candomblé and Umbanda.Looking at these numbers Pierucciasks: Where is our proclaimed reli-gious diversity? It is true that this strictidentifications don’t take into consid-eration what we call “multiple belong-ing”, that is, the common Brazilianpractice of those who call themselvesCatholic, but go regularly to Can-domblé cults or of any other religion: Igo to the Mass on Sundays and visitmy Mother of Saint in the yard onFridays.

And yet the hegemony of Christi-anity has political ramifications, de-spite the codification of the separationof church and state under the 1891Brazilian constitution. During the2010 presidential campaign, religionwas used to bolster conservative views,especially on sexuality and reproduc-tive questions. Cultural flashpoints –including the right of gay men and les-bians to a legal union, and the legal-ization of abortion – became the focusof inflamed public discussions. Thisinvestment in dogmatic arguments

during a political campaign was highlyunusual for Brazil, even though theculture is permeated with religious val-ues and the rate of religious obser-vance is very high. In previouscampaigns, religious symbols and doc-trinal principles were not so directlyraised.

But the use of religious dogma tofight political values shows the signif-icant public role that religions, partic-ularly the Catholic Church, still havein Brazilian society and in seeking toinfluence the political process. Thosethat believed in secularism, or at thevery least the separation of religionand state, were forced to aggressivelyoppose religious intervention. The di-visiveness points to a growing trend ofanti-religiosity in the country. In eachcensus, the number of people declar-ing themselves “without religion”grows most.

Juan Marco Vaggione, an Argentinesociologist, argues that “religious nar-ratives are publicly articulated and be-come debatable material not only bysecular groups but also by those who,being religious, do not agree withsome aspects of the official doctrine.”Indeed, during the 2009 electoralcampaign, one case became a causecélèbre. A nine-year-old girl, raped byher stepfather and made pregnant,sought a legal abortion. When herbishop attempted to prevent the ter-mination of that pregnancy, the reac-tions and discussions in the mediacame not only from the secular sectorsof civil society but also from churchmembers, other Catholic Bishops,priests and Protestant pastors, offeringevidence, as a result, of dissident waysof thinking internal to the churches

After the elections of October 2010,evangelical organized groups in Con-gress had increased their presencefrom 43 to 71 members. The electoral

campaign and the focus of religiousgroups on securing positions in Parlia-ment, forces us to consider crucialquestions surrounding the public roleof religions in modern societies andsecular States. Are these public inter-ventions of the Catholic Church, andthese protestant pastors elected to theParliament, a violation of the demo-cratic and constitutional principle ofthe separation church/state? Or, on thecontrary, is this a demonstration, anda result, of the acceptance of democ-racy, one which allows religious groupsand institutions to participate in thepublic debate regarding questions ofinterest to greater society?

The emerging public debate over re-ligion’s role in Brazilian politics fore-tells a more diverse and complexreligious landscape within Brazil’s so-ciety that promises to be exciting tosee and to live.

Maria José Rosado-Nunes is a gradu-ate professor of sociology of religionand feminist studies at the PontificalCatholic University of São Paulo. Sheis currently a researcher at the Na-tional Researcher Center (CNPq).Professor Rosado-Nunes has Ph.D inSociology from EHESS of Paris. Bothher two master’s projects and doctoraldissertation, Ph.D., received the high-est grade possible, also earning an hon-orable mention for EHESS’ annualaward. Her current research focus isCatholicism and Modernity –women’s rigths in the CatholicChurch. Rosado-Nunes was also visit-ing professor at Harvard University in2003.Her publications include a book andnumerous articles on Catholic Churchand feminist questions. She workedfor years with Catholic-base commu-nities in the poorest areas of Brazil.

ANALYSISNew Europe | Page 11NEW EUROPE


Participants take part in the Procession of Fogareu, as part of Holy Week celebrations, held at the city of Goias, Brazil, 21 April.|EPA/FERNANDO BIZERRA JR

RELIGION

Speaking out, out of turn? It’s time to polish ourswords

The day after the spotty teenager in charge of the UK Ex-chequer announced that they were going to put in placebanking reforms in 2019, the British woke up to sometruly astounding news this week. A young trader at UBSmanaged to lose €2.3 billion… and got arrested.Bankers blowing eye watering sums is nothing new, butgetting nicked for it is something very new. How did thathappen? Simple. He was on the bottom rung of the lad-der. The general rule is, if you’ve got a key to the execu-tive lavatories, you’re in the clear.This case shows that oversight of their own people whohandle billions has not improved, despite their drug andgreed filled binge that brought down the world economy.We can only wonder what scale of catastrophe would in-duce a change in behavior in our financiers, or thosepoliticians who aided and abetted them in their plunder,the lawyers who grew rich explaining away their crimes,the lobbyists who worked to make it even easier for themto line their pockets at the expense of society.I can’t think of one.But I do have an idea. Call me old school, but it surelymust be time to bring back decimation. Gather the Boardand executives in their glass towers and pick out at ran-dom one in ten and throw them off the roof.It’s a bold idea and one that some will recoil from, butwhat else would work? If you’ve got any ideas, any at all,please shout them from the rooftops because nobody, no-body at all knows how to get out of this mess. Well, that’snot quite true, there is one tired old idea being put intopractice: Make the poor pay for it.And they will pay for it. The Greek suicide rate has dou-bled since the crisis, as just one example. Those who‘choose life’ will also choose higher taxes, lower pensionsand a lack of public services. None of those responsiblefor the crisis will have these worries. Their pensions aresafe, their savings are safe.Here’s another example. If any of us makes a serious errorat work, we’d get sacked. If you’re a politician who pushedfor stripping away all controls and oversight from themarkets and so on, the electorate might sack you, butyou’ll never be short of highly remunerated work. Takethat nice chap, Tony Blair. He’s part of the Middle Eastpeace process. Is there anyone less qualified, less appro-priate? In earlier times, after making a decision as disas-trously wrong as invading Iraq, in the search for WMD,a British Premier would have resigned. Instead he poncesaround the world saying history will be my judge, the ex-cuse of the narcissist. There are thousands of other exam-ples, no less grotesque.These two points are the core of the real inequality in theworld.To its credit, the EU has given up pretending to care aboutits citizens. Whenever there is a choice to be made betweenpolitical expediency and public interest, or even basic stan-dards of morality, expediency wins, every single time.Well, we’ve noticed and we don’t like it.Europe is being destroyed, not by extremists, but by thosewho profess to have built it.The question is; do we completely reform the EU, or dowe have to wait until we’re standing in the ruins? Bywhich time, those whose inaction and self interest broughtus low, will be safely ensconsed in their hideaways, sur-rounded by taxpayers money.

[email protected]

CONSTRUCTIVE AMBIGUITY

By Maria José Rosado-Nunes

By Andy Carling

Dien Bien Phu nestles between Vietnam andLaos and represents a historical hinge betweenthe expulsion of French colonial forces and theentry of the United States into Indochina.Thousands died and were wounded during asiege that marked national psyches.

Today, deep inside Laos there is anothersiege. Unlike Dien Bien Phu shows no con-clusion and continues largely unnoticed, butthose caught up in it are slowly atrophying,often literally. Sheltering on the slopes of PhouBia, in the shadow of Laos’ central mountainbelt, ethnic Hmong are struggling for theirrights. Trapped in a closed military zone, fewoutsiders have been able to record the real storyof their survival. Communication is only possi-ble by satellite telephones recharged from bat-teries smuggled into the area what emergesreveal a people reduced to subsistence survival.

The Hmong have a history of migration,

having emerged approximately two thousandyears ago as a distinct ethnic group. Attemptsat the turn of the nineteenth century to settletraditionally Hmong lands saw one of thelargest migrations of Hmong from their home-land and into conflict with Europe’s farflungbut expanding empires. The First Indochinaand Vietnam wars ended European colonial-ism but began a new phase of marginalisationand discrimination of the Hmong that persistsunder region’s current communist regimes.

Laos has repeatedly failed to live up to inter-national promises to resettle and integrateHmong, instead Vientiane has placed thou-sands in camps from which they cannot ven-ture far. This has undermined the UnitedNations and its agencies that whilst voicing ob-jections proved impotent in defending thesepeoples’ rights. Meanwhile in countries such asThailand access to state services is limited if not

closed to many Hmong. Many of those af-fected are the same that were forcibly repatri-ated to Laos amid scenes of Thai soldiersforcing refugees onto waiting trucks. Theirwhereabouts are uncertain today, but withoutresponsible international intervention a grimfuture seems to await them and their families.

In 2011 the European Union will adoptwhat it terms a ‘Modernised EU DevelopmentPolicy’ for relations with Laos and Vietnam. Itappears ready to do so without any clear strat-egy on how to address the human rights issuesof the Hmong. These concerns are real. TheUnited States has given asylum to thousandsof Hmong over the years based on this alone.Neighbours such as Cambodia and Thailandhave shown no compulsion in returning thou-sands to the communist regimes of Vietnamand Laos where many are interned and stig-matised for attempting to win their rights in a

third country. The European Commission, andin particular the EEAS, must strengthen itsstance towards Vietnam and Laos. Existinghuman rights talks, taken over from Sweden,remain toothless with only channels such as theUnited Nations UPR offering any kind of av-enue for holding these states to albeit very lim-ited account. Therefore, EU diplomats musttravel to Phou Bia to assess the humanitariansituation - if Vientiane proves obstructive, itmust demonstrate once and for all why. Simi-larly, the European Parliament needs to shedlight on the situation with both hearings to in-form and an official delegation visit to investi-gate. If the EU’s inline presence reflects reality,then it is telling that a hyperlink to the EU’s‘Guidelines on Human Rights’ redirects you tothe European Council’s generic homepage. TheEU’s policy to human rights and Laos must notcome to the same dead end for the Hmong.

EU WORLDPage 12 |New Europe NEW EUROPESeptember 25 - October 1, 2011

POLITICS

Situation of Hmong in Laos

Discrimination against Roma, or anti-Gyp-syism, is a “specific form of racism” whichneeds to be combated throughout Europeand beyond, new policy recommendationsby the Council of Europe (CoE) say.

The CoE’s European CommissionAgainst Racism and Intolerance (ECRI)issued on 19 September a set of guidelinesfor combating anti-Gypsyism and discrim-ination against Roma in its 47 memberstates. The guidelines, contained in ECRI’s13th General Policy Recommendations is-sued in June, call for the ending of the seg-regation of Roma children in schools, toprovide access to unsegregated, decenthousing, with the correct legal safety nets,and for greater access to healthcare and san-itation.

The guidelines also suggest that Romachildren should be registered at birth andissued with identity documents, and thatgovernments should actively encourageRoma victims of violence, including policeviolence, to lodge complaints with the rele-vant authorities.

These guidelines are all about mobilisa-tion and capacity-building, says JeroenSchokkenbroek, the CoE’s Special Repre-sentative to the Secretary General on RomaIssues. “The Council has been working onthese policies for decade,” he said at thelaunch of the guidelines in Brussels. “Wehave been working not just in the areas ofemployment, education, healthcare andhousing, but also on national strategies forRoma inclusion.”

In October 2010, following high-profiletensions in France between the authorities

and the Roma population, which angeredthe European Commissioner for Justice,Fundamental Rights and Citizenship, Vi-viane Reding, the CoE realised a change ofapproach was needed. Secretary General,Thorbjøn Jagland, “took the initiative insteering the debate in a more positive di-rection,” says Schokkenbroek.

The CoE, says Schokkenbroek, felt itneeded to give a stronger focus to theRoma issue, and take some specific ac-tions. “For example, capacity-building ismuch needed when designing policies.Many member states see the Roma issues

as a real challenge.”one positive policy development, he says,

is the creation of mediators, who liaise withthe the Roma communities and authoritiesat local level. “In concrete terms, this has ledto more Roma children going to, and stay-ing in, school, reducing the drop-out rate,”he says. However, all is not perfect. In manycases mediators are fighting for their sur-vival. In many cases, it is not recognised asa full-time profession, and what mediatorsexist are often not employed through localauthorities, but through other organisations,such as NGOs. In many cases, says

Schokkenbroek, they are on “precariouscontracts”.

Since March, he continues, there areabout 415 mediators in 15 countries. Now,with the aid of the European Commission,there are hopes that around 1,000 media-tors can be engaged by the end of 2012.

Ultimately, says Jeroen Schokkenbroek,“it is not only about what is new, but alsoabout implementing those existing policies.We need to keep asking, ‘What went right?What went wrong?’ And it is also aboutproviding bi-lateral advice, and alwaysabout raising public awareness.”

HUMAN RIGHTS

Anti-Gypsyism needs to be targeted inspecific, practical and sensitive ways

Children playing between trailers at a gypsy camp in Namur, Belgium, 30 May 2011. The Mayor set 12 June as a deadline for the 500 or so inhabitants of the campto leave voluntarily, otherwise they would be evacuated by the police. |BELGA PHOTO JOHN THYS

By Cillian Donnelly

The tendency for governments to cut back onspending for the social sector has had “disas-trous results” for gender equality, according toone senior human rights campaigner.

“We are a human rights organisation andwe approach this from a human rights per-spective,” says Maud de Boer Buquicchio,Deputy Secretary General of the Council ofEurope (CoE). “Gender imbalances, includ-ing in the labour market, should be seen in thisway, not just from an economic point of view.Women should be allowed to participate indecision-making and politics, for instance.There should be equal representation at a pol-icy-making level. At the Council of Europe,we are fighting for this at both local and na-tional level.”

Despite existing norms and standards inEurope, there are still some “obvious gaps” inequality that need to be addressed, particularly,she says, by men, who cannot be dismissedfrom the dialogue. “It is very important tohave a discussion about the place of genderequality in achieving a successful Europe”, deBoer Buquicchio told New Europe, shortlyafter speaking at a European Commission-sponsored conference on Equality BetweenWomen and Men. “It is obvious that manywomen are left out of the economic develop-ment [of Europe], but also the democratic de-velopment, which is maybe not as obvious.”

The employment potential of women, shesays, has not been fully exploited. “The womenare out there, and with employment, there arevery practical solutions to achieve full partici-pation in the workforce, for example througha better work-life balance like investing in carefacilities, which enables more time at theworkplace, plus sharing parental responsibili-ties.” Sadly, she says, the financial crisis has hada negative impact on social spending, meaningthis kind of labour market investment is oftenignored. Despite advances, she adds, inequal-

ity in pay is still something that people need toactively pursue.

Turning back to the issue of human rights,the CoE’s priorities for gender equality, saysde Boer Buquicchio, “cannot avoid the issueof violence.” Violence against women, shecontinues “is sometimes just seen as frustra-tion, but in the worst cases, the men considerwomen as objects, and hurt and ill-treat themas they like. This is a total lack of respect forhuman dignity”.

The CoE has drawn-up a convention on vi-

olence against women, which, she says, can besummed up as ensuring prevention, protectionand prosecution. While there have been somepractical policies aimed at helping the victimsof violent abuse, such as the creation of shel-ters, this is not enough, according to de BoerBuquicchio. “We must make importantchanges. What we need is holistic, integratedpolicies”.

The convention on violence against womenis currently in the process of ratification by the47 member states of the Council of Europe.The process has so far been slow, however, deBoer Buquicchio believes that momentumand support for the convention could start tobuild up again, now that parliaments havestarted doing business again after the summerrecess. One way to gain bring the conventionto higher attention, and get it on the politicalagenda of more countries, is to push for theEuropean Union to adopt it. Currently ten in-dividual EU member sates have signed up tothe convention, but should it be adopted bythe EU institutions, it will have legal weighthroughout the Union as a whole. “The Lis-bon Treaty confers a legal personality on theEU,” she argues, “and while this convention isopen to the member stets, it is also open to theEU as such. This is the appeal I will make tothe European Commission and to the Sub-Committee on Human Rights in the Euro-pean parliament: that the EU become a partyto this convention”.

EU WORLDNew Europe | Page 13NEW EUROPE


GENDER EQUALITY

EU must embrace complete gender equality policies

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Expiration Date: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Card Holder: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Date: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Signature: - - - - - - - - - - - - -

Fax to + 32 2 5390339or mail to Avenue de Tervuren 96,

1040 Brussels, Belgium

954

Hillary Clinton (front row, third left), US Secretary of State, and Catherine Ashton (front row, secondright), The EU High Representative for Foreign Affairs and Security Policy, at the UN in New York, 19September, 2011. According to the Council of Europe, better policies are needed to ensure that womencontinue to serve at high political level. |EUROPEAN COMMISSION

World chess legend Garry Kasparov arrivedat the European Parliament on 20 Septem-ber to promote his new initiative to encour-age chess to be more taught and played inschools.

Kasparov Chess Foundation Europe -www.kcfe.eu

New Europe Online Editor James Drewspeaks with Garry Kasparov:

Introducing the new programme, Chess inEuropean Schools, of his Kasparov ChessFoundation Europe, Kasparov expressed hishopes of providing a chess curriculum, mate-rials and a communications project to moti-vate children to learn the game.

The programme would also be imple-mented through the European Chess Union,headed by Silvio Danailov.

“With this proposal, it is our ambition torealise the dream of bringing chess into class-rooms so that everyone may enjoy the bene-fits that the game of chess offers,” Kasparovsaid.

The proposal also focuses on how chessbenefits students in other academic areas -supporters say that the ability to develop a

plan, visualise patterns and to solve problemswill greatly enhance a student's education,and training for teachers, who would thenpass on their skills to students, is also set to beincluded.

Chairing the meeting, Bulgarian MEPSlavi Binev said that he was excited about theproject and looked forward to its implemen-tation: “This is a brilliant idea. The indis-putable authority of the best chess player everand his team and a prominent manager in thechess world is the bedrock of the successfulfuture of this project,” he said.

Kasparov and Danailov added that theydid not know the precise number of childrenwho played chess throughout Europe, butsaid that 300,000 children were involved inFrance alone.

Kasparov became the youngest ever undis-puted World Chess Champion in 1985 atthe age of 22, and held the official FIDEworld title until 1993, when a dispute withFIDE led him to set up a rival organisation,the Professional Chess Association. Kasparovannounced his retirement from professionalchess in 2005.

SPORT

Chess legend aims to bringgame to new EU generation

By Cillian Donnelly

Former Soviet leader MikhailGorbachev lashed out on 21 Sep-tember at the rulers of modernRussia, saying they had little inter-est in the welfare of average citi-zens and even less desire to makethe country democratic. "It is ob-vious, that powerful personal and

corporate interests are committedto maintaining the status quo,"Gorbachev wrote in theMoskovsky Komsomolets news-paper. "Russia's leadership lackspolitical will ... and so it is only ca-pable of cosmetic measures andmore often the imitation of re-

forms," Gorbachev said.The article said Russia was return-

ing more and more to the Sovietgoverning style of a one-party staterun by a ruling class answerable onlyto itself. "Executive authority in Rus-sia does whatever it wants to societyand it is controlled by no one. Our

president can name his own succes-sor, and extend or simply place him-self into power by using manipulatedelections," he said.

Russia has scheduled presiden-tial elections for March, with Pres-ident Dmitry Medvedev andPrime Minister Vladimir Putin -

who has already served two termsof office - the most likely candi-dates. Both are members of theUnited Russia political party and,aside from them, no other Russianpolitician has even a marginalchance of winning the election,polls have said.

RUSSIA|POLITICS

Gorbachev: Russia committed to maintaining the status quo

On 22 September, Russian Prime MinisterVladimir Putin vowed to turn the North-east passage into a key shipping route andmodernise its Arctic infrastructure. "We seethe future of the Northeast passage as thatof an international transport artery capableof competing with traditional maritimeroutes when it comes to service fees, safetyand quality," Putin told an internationalforum, devoted to exploring the Arctic, inRussia’s northern city of Archangelsk. Theforum is named “The Arctic – a Territoryof a Dialogue.” Among the participantswere Prince Albert II of Monaco, Iceland’sPresident Olafur Grimsson and the Chair-man of the Arctic Council Gustaf Lind.Climate change is beginning to open up atlast as polar ice recedes. Most of the forum’sparticipants agree that in the near future,the way over the Arctic Ocean will becomeone of the world’s major trade routes. How-ever, they cautioned that while exploring theArctic, people must be very careful not todamage its unique nature.

“Recently, we had a very successful trialdelivery of oil and gas via the northern searoute,” Putin said. Forecasts say that by theend of this year, the total volume of thecargos delivered by the northern sea routemay make 700,000 tons. And, I hope, thisis only the beginning. We are launching alarge-scaled project which needs a con-temporary infrastructure. It will stir theeconomic development of Russia’s north-ern territories – and it will create thou-sands of new jobs. We intend to modernisethe already existing sea ports and to buildnew ones, like the port Varandey in the Yu-gorskiy Shar Strait, and the port Sabettaon the Yamal Peninsula. And, of course,other kinds of traffic in these regions –river traffic, highways, railways, airports –will also develop,” Putin added.

"The shortest route between Europe'slargest markets and the Asia-Pacific regionlie across the Arctic. This route is almost a

third shorter than the traditional southernone," Putin said. "Our plans include mod-ernising river, automobile, and rail routesand communications, and northern airfieldsand airports as well as the renovation ofPolar aviation," Putin said. "The states andprivate companies which will choose Arcticshipping will no doubt receive hefty eco-nomic advantages and dividends," he said.

"It is transport -- the creation of new seaand air corridors -- that is capable of be-coming one of breakthrough projects unit-ing Arctic states," Putin said.

Russia will order three nuclear and sixdiesel icebreakers by 2020 to allow passagealong its Northern Sea Route as the coun-try seeks to tap Arctic oil and gas reserves,Putin said. The country, which has 10 oper-

ating icebreakers now, aims to expand trans-portation links through northern waters,Putin said.

Meanwhile, Russia plans to build a mod-ern communications system and a chain ofemergency maritime assistance centresalong its Arctic coast, Emergency SituationsMinister Sergei Shoigu said at the sameevent. Eight rescue centres connected bystate-of-the-art communications links willbe built along the coast of northern Russiato assist increasing international ship traffic,and to monitor the region's environment."Economic development is impossiblewithout reliable solutions to safety issues,"Shoigu said.

The safety network is part of an ongoingRussian government programme to develop

energy resources in the Arctic Ocean, andto promote increased use of the formerlydifficult-to-navigate north-eastern passageship route, conference speakers said.

Russian Natural Resources Minister YuryTrutnev said retreating pack ice caused byglobal warming has now made ship travelalong the northern coast a commercially vi-able way to move freight between Europeand Asia.

Use of ice breakers to keep the route openduring the winter months may become un-necessary if the warming trends and polarice cap shrinkage continues, he said.

In August, Russia's national oil companyRosneft signed a half-trillion-dollar dealwith energy company Exxon to developArctic oil and gas fields.

Participants of the Second International Forum “The Arctic: Territory of Dialogue” (Left to Right): Russian Minister of Emergency Situations Sergei Shoigu, Iceland’s President Ola-fur Ragnar Grimsson, Albert II, Sovereign Prince of Monaco and Russian Prime Minister Vladimir Putin prior to the session in Arkhangelsk, Russia, 22 September 2011. The forum’sfocus this year was on creating Arctic transportation infrastructure as a foundation for the development of the Arctic.|EPA/ALEXEY DRUZHINYN MANDATORY CREDIT/RIA NOVOSTI

EU WORLDPage 14 | New Europe NEW EUROPESeptember 25 - October 1, 2011

On 21 September, Russian Finance Min-ister Alexei Kudrin said his country isplanning a financial information exchangetreaty with Switzerland to help track

down tax evaders. The agreement, to be signed in coming

days, will give investigators access to pri-vate Swiss bank accounts owned by indi-

viduals suspected of evading Russiantaxes or of money laundering, RIANovosti quoted Kudrin as saying. "Wewill get the information on request," Ku-

drin said. Tax evasion is rampant in Rus-sia, where unscrupulous individuals andbusinesses often transfer their income tooverseas accounts.

RUSSIA|TAXES

Russia-Switzerland treaty to crack down on tax evaders

RUSSIA|ARCTIC CONFERENCE

Putin vows to modernise Arctic infrastructure

ENERGY & CLIMATENew Europe |Page 15NEW EUROPE


Advancements in two competinggas pipeline projects, Nabuccoand South Stream, have recentlybeen announced. Due to thetiming of the announcements,some questions arose concerningboth projects which needed animmediate response: Which willeventually be first to supply gasfrom the South to EU citizens?Can Europeans afford bothpipelines during these times ofausterity? Do they actually needso much gas?

“If an agreement is reached onthe Trans-Caspian project,South Stream will immediatelybecome dead,” European PolicyCentre's UK expert AmandaPaul told New Europe. “TheRussians will be beggingUkraine for good transitrates…whose energy landscapewill change for the better.”

“The EU has been negotiatingon the South Corridor and di-versification of the energy supplyfor some years,” GeopoliticalForum Director Marat Terterovexplained. “I would urge againstsimplistic approaches towardsthe gas pipelines solutions.”

The tissue of European energysupply is complex and woven indifferent layers, involving theEU, third parties, bilateral part-ners, member states and thirdcountries. Competition is ex-tremely intense - the political fi-bres involved in energy deals arenot always visible, but end up be-coming indispensable.

“Both project Nabucco andSouth Steam are subject to polit-ical lobbying from various influ-ential groups,” said Terterov.“The future of ‘Nabucco’ is de-pendent not only on its competi-tion with the South Stream, buton the readiness of Turkey tohost a foreign pipeline.”

At present, Turkish companiesare involved in intense negotia-

tions with Azerbaijan authoritiesto determine the conditions ofgas export from the Shah-Denisnatural resource. The major ob-stacle facing the Turkish side isthe reluctance to accept a foreignpipeline in its territory; they pre-fer to use already existing ones,those that fall under home juris-diction.

“The situation with Turk-menistan is rather unclear be-cause they ‘promised’ gas to theEuropean Commission aroundthree years ago, but the businessdidn’t develop further than polit-ical rhetoric,” continued Tert-erov. “Not to forget thatTurkmens are negotiating gassales to Russians and Chinese,but at the same time [they aredoing it] in a ‘multi-vector’ ap-proach according to contempo-rary fashion.”

But the key development forthe Nabucco project at presentlies within Azeri-Turkish nego-tiations, which were planned toconclude in October. AlthoughShah-Denis gas is not sufficientto provide the initial volume tofill the pipeline, it is just a start-ing point.

Whatever the problems thatface Nabucco, those that besetSouth Stream do not seem anyeasier to solve. “Although anagreement was signed recently toconstruct a pipeline through thesea bed, for Russians it would bemuch cheaper to invest in a re-construction of the Ukrainiangas system,” Terterov added. “Ac-tually, I’m convinced thatGazprom would be entirelyhappy to invest in Ukraine, be-cause it is so much cheaper. Thelate agreement between France,

Germany, Italy and Russia, inSochi, can be regarded as a sig-nificant success of ‘energy diplo-macy’. The project is much moreat the stage of ‘diplomatic cha-rades’ that an actual construction.Russians are putting pressure onUkraine and Brussels to push itsinterests in negotiations, notmore than that.”

MEP Vladmir Urutchev fromBulgaria believes that at thisstage the EU should pursue bothprojects. “They are in hard com-petition with each other, and atthis stage, it is impossible to saywhich one will win,” he told NewEurope. “The idea is to secureourselves – Europeans - in gassupply for years to come. Europewill need more and more gas inthe future and it is interesting forcitizens to have two competingprojects, in terms of competition,

allowing to negotiate cheaperprices for energy and variousroutes,” he added.

And he disagreed with bothPaul and Terterov's analyses:“South Stream has an immenseadvantage to bypass a transitcountry. We have to helpNabucco and South Stream tokeep on running to get our gasfrom more suppliers.”

Urutchev is convinced thatEuropeans should pursue theirown interests first, before ex-tending favours to third coun-tries. Currently, the unstablepolitical situation in Ukraine andthe recent imprisonment of theformer prime minister Yulia Ty-moshenko - under the pretext ofabuse of power - and simultane-ously concluding gas agreementswith Russia, do not truly inspireconfidence in European clients.

ENERGY|GAS PIPELINE

Nabucco vs. South Stream: Race to the finish

(Left to Right) EdF President Henri Proglio, member of the Board of the Executive Directors of BASF Harald Schwager, Russian Prime Minister Vladimir Putin, Chairman of the Man-

agement Committee of Gazprom Alexei Miller and ENI CEO Paolo Scaroni during a signing ceremony between Gazprom, ENI, EdF, and WintershallHolding to realise the sea part of

the South Stream gas pipeline in Sochi, Russia, 16 September 2011. |EPA/YANA LAPIKOVA/RIA NOVOSTI POOL

ADVERTISEMENT

By Anna Vvedenskaia

ENERGY & CLIMATEPage 16 | New Europe


ENERGY|CO2Schwarzenegger hails AER commitment to green energy

Former California governor and Hollywood actor ArnoldSchwarzenegger, President and founder of the R20, a groupof regions and federated states which have decided to makethe fight against climate change their priority, gave an awardto Assembly of European Regions (AER) President MichèleSabban for her commitment in favour of climate change. Thisceremony took place in the framework of the second R20summit, in New York. “I am glad to tell you that 77% of ourmembers have now developed regional action plans to an-swer the coming shortage of fossil fuel! We are also proud ofthe fact that, in some regions, green energy account for nearlyhalf of the total energy consumed,” Sabban said.

CLIMATE|CO2Poland: Raising EUclimate targets unrealisticThere is no chance of the European Union raising its carbon-dioxide (CO2) emission reduction targets in the run up to aglobal climate change summit at the end of the year, Poland'sEU Affairs Minister Mikolaj Dowgielewicz, whose countrycurrently holds the bloc's rotating presidency, was quoted assaying by the press on 22 September. In 2008, the EU pledgedto reduce CO2 emissions by 20% by 2020, as compared to1990 levels. But while other major economies have failed tomatch that level of commitment, some EU states, led byBritain, have called for a 30% reduction. "Let's be serious, no-body wants to raise emission targets to 30%. Forget it,"Dowgielewicz told an audience at the Centre for EuropeanPolicy Studies in Brussels. He singled out Germany, stressinghow difficult it would be for it to back higher emission targetsafter its decision to abandon nuclear energy, which will forceit to rely on more CO2-intensive sources of electricity.

ENERGY|BUSINESSOMV to shed refinery, focus on gas On 21 September, Austrian energy group OMV announcedthat it would reduce its refinery and marketing business andfocus on gas in the future. At a corporate event in Istanbul,the company said it plans to sell off assets worth €1 billionby 2014 in that segment. Chief Executive Gerhard Roisssaid this sector would be reduced to 25% of the company'sactivities, from the current 35%, as returns and growth arelow in this part of the business. "This means less refining ca-pacity, less filling stations, less businesses," he said. OMVplans to stabilise existing production in Austria and Roma-nia in the short term, and to increase exploration in theCaspian region, the Middle East and Africa.

The International Atomic Energy Agency (IAEA) has loweredits projections for nuclear energy growth to 2030 by 8% in thewake of the Fukushima nuclear disaster. In its annual forecastpublished in Vienna, the nuclear agency now estimates that 501gigawatts of nuclear power generating capacity will be installedby 2030, compared to a previous estimate of 546 gigawatts. Thisrepresents the IAEA's conservative forecast, based on decisionsmade by governments and money already spent on new powerplant projects.

"These are simply the responses of some countries who said,nuclear is nothing for us anymore," IAEA energy expert Hol-ger Rogner was quoted as saying by the press. He said thataround six countries who had been on the point of going nuclearhad reconsidered following the accident at Fukushima DaiichiNuclear Power Station, which has been leaking radiation sinceit was damaged by an earthquake and tsunami in March.

Currently, there are 375 gigawatts of nuclear power capacityin the world, and nuclear power represents 13.5% of the world'senergy market.

According to the conservative estimate, that share is going todrop to 6.2% until 2050, down from the previously projected7.1%. While nuclear growth is expected to be driven by China

and India in coming years, Germany's decision to phase out nu-clear power and Japan's review of its energy policies led to thedownward revision.

Rogner said that it is unlikely that many countries will beable to follow Germany's path. "Other countries are not nec-essarily in the affluent situation of Germany," he said. Ger-man Foreign Minister Guido Westerwelle wrote in an articleto the Wall Street Journal last week that “the tragedy inFukushima triggered a further profound reassessment in Ger-many of the risks of nuclear power. Ultimately, Fukushimaaccelerated our change of direction. Five months after the ac-cident, Germany decided by law that nuclear energy will bephased out by 2022. The broad, democratic consensus wehave reached in Germany, founded on wide-ranging deliber-ations with engineers, planners and economists, is that thischange of track on energy policy is possible—technically, con-ceptually and economically. Our intention now is to map outour long-term progress along that road, heading for energyprovision that is clean, affordable and safe,” he wrote. “Thisdecision represents a huge step forward on Germany's roadtowards sustainable energy provision sourced largely from re-newable,” he added.

ENERGY|NUCLEAR

IAEA lowers nuclear growth forecast after Fukushima

Russian gas monopoly Gazprom islooking at Asia as its market for lique-fied natural gas (LNG) from itsSakhalin II field and other sources.Gazprom has struggled to sell LNGin Europe this year, sending cargoesof liquefied gas to Asia as it seeksto become a global supplier. "It's notthat we don't like Europe or don'twant to supply LNG there," WorldGas Intelligence quoted Frederic Bar-naud, director of LNG at the com-pany's London-based GazpromMarketing & Trading unit, in an in-terview. "Today both demandand margins are in Asia."

Gazprom Marketing & Trading

plans to trade up to three million tonsof LNG this year, securing less thanhalf of the fuel from the Gazprom-controlled Sakhalin II project, Bar-naud was quoted as saying. The restwill be supplied from Egypt, Nigeria,Qatar and Australia, and reloadedfrom the United States, he said."Nowadays we don't do much businessin Europe or in the Atlantic Basin,"Barnaud said. "If this winter demandpeaks in Europe and matches our ex-pectations to keep some — maybeEgyptian — cargoes in Europe, thenwe will do it."

Meanwhile, the demand for LNGis expected to increase in Asia, and

Singapore is set to tap the significantmarket growth, International Enter-prise Singapore CEO Teo EngCheong was quoted as saying by thepress. By 2030, he said natural gasdemand is projected to increase by60% to overtake coal in the globalenergy mix, to become the secondmost dominant source of energyglobally. Also, the global use of nu-clear as an energy source has slowedsignificantly since Japan was hit by atsunami and earthquake in March.He said Asia's LNG demand surgedstrongly after the 2008 financial cri-sis. It is expected to grow faster thansupply in the coming years.

ENERGY|GAS

Gazprom eyes LNG markets in Asia

Russian President Dmitry Medvedev visits the Grand Aniva liquefied natural gas tanker during an opening ceremony of the first Russia's liquefied natural gas(LNG) plant in the town of Prigorodnoye, south Sakhalin, far east, Russia, 18 February 2009. |EPA/DMITRY ASTAKHOV/RIA NOVOSTI/KREMLIN POOL .

Actor and former California governor Arnold Schwarzenegger is thePresident and founder of the R20, a group of regions and federatedstates which have decided to make the fight against climate changetheir priority. |EPA/GEORG HOCHMUTH

ENERGY & CLIMATENew Europe|Page 17NEW EUROPE


Seoul said on 20 September it would consider all possiblerisks as it prepares for more talks on a huge project to pipeRussian natural gas to South Korea via North Korea. "Wewill examine all possible measures to tackle North Koreanrisks and reflect them in the process of further discus-sions," the Ministry of Knowledge Economy was quotedas saying by the press in a report to parliament. But itnoted that the project "is still in its infancy and there hasbeen no discussion yet on detailed terms of a contract."

Russian gas monopoly Gazprom announced two weeksago that it signed a memorandum of understanding withNorth Korea to build a natural gas transmission system tothe Korean Peninsula. South Korea is one of the largestnatural gas consumers in the world. If built, the pipelinehas the potential to bring in more than $500 million eachyear for the North Korean government in terms of transit

fees. The pipeline, estimated by the ministry to cost $3.4billion, has been mooted for years. It was back in the head-lines last month when the North's leader Kim Jong-Il re-portedly gave it his backing during a summit in Russiawith President Dmitry Medvedev.

South Korea's President Lee Myung-Bak said in Sep-tember the pipeline may be speeded up. "I think it willproceed faster than expected. It will be great if the projectmaterialises," he said.

Envoys from South and North Korea were expected tomeet in Beijing on 21 September in the latest attempt toget multinational talks about North Korea’s nuclearweapons program back up and running after a nearlythree-year stalemate. But constructing the natural gaspipeline from Russia that would run across the Koreanpeninsula could also be on the agenda.

ENERGY|GAS PIPELINES

Russia, two Koreas renew pipeline talks

Russia paints ‘No Trespassing’ sign in Arctic

As global warming intensifies the race to lay claim tothe Arctic and its massive oil and gas reserves, Russiavowed to increase its military presence in the region,telling NATO to stay out. "Our northern border used tobe closed because of ice and a severe climate," Interfaxquoted Anton Vasilev, a special ambassador for Russia'sForeign Ministry, as saying. "But the ice is going awaywe cannot leave 20,000 kilometres unwatched. We can'tleave ourselves in a position where we are undefended."Only Arctic Council nations - and not outside agencieslike NATO or the European Union - should set thegroundwork, he said on 20 September. The statementseems to be linked to an international forum devoted tothe subject of Arctic transport routes in the Far NorthRussian city of Arkhangelsk. Russia’s Prime MinisterVladimir Putin addressed the forum on 22 September,saying: “Recently, we had a very successful trial deliveryof oil and gas via the northern sea route. Forecasts saythat by the end of this year, the total volume of the car-gos delivered by the northern sea route may make700,000 tonnes. And, I hope, this is only the beginning,”he said.Vasilyev said earlier that there are no problems in theArctic to which a military presence would be a solution.Defence sources point out that NATO is not engaged inthe Arctic, has no Arctic policy or military operations inthe region. They told New Europe that, for the moment,there are no moves for NATO to move into the Arcticso it’s not really a concern. So what prompted Vasilyev’sstatement?Chris Weafer, chief strategist at Troika Dialogue inMoscow, noted the Arctic has become more accessibleand, therefore, a little less secure than it used be. “Youonly have to look at the number of people trekking tothe North Pole these days – it seems only a question ofwhether we get traffic lights or a McDonalds up therefirst,” Weafer told New Europe on 22 September. Headded that the more hospitable conditions have also al-lowed seismic surveys to show that the region has enor-mous potential as a source of hydrocarbons and minerals.“Moscow is not about to let any piece of that prize slipthrough its fingers. The increased military presence de-livers that message very clearly. No footprints in thesnow in Russia territory without an invitation fromMoscow,” Weafer said.It should be noted that all of the Arctic countries ex-cept Russia are NATO members. Russia has been kindof active in the Arctic, going back to their planting aflag on the seabed in 2007 – not a military move per se.Meanwhile, Russia is building a fence around what theKremlin regards as its backyard. “It has placed a ‘no tres-passing and no hawkers’ sign on that fence,” Weafersaid. “But, for now, it is more a white picket fence thana razor wire barrier. Moscow is moving cautiously to de-lineate its territory in the Arctic because it does notwant to antagonise the UN ahead of the formal appli-cation to have Russian sovereignty over the LomonosovRidge recognised.”

[email protected] on twitter @energyinsider

ENERGY INSIDER

On 20 September, Ukrainian PrimeMinister Mykola Azarov said his coun-try is ready for a compromise and hopesthat a new viable gas contract with Rus-sia will be concluded during UkrainianPresident Viktor Yanukovych's upcom-ing visit to Russia.

Kiev is lobbying for a better gas dealwith Russian gas monopoly Gazprom.Ukraine has complained the currentprice of $354 per 1,000 cubic metres isfar too high and that it will likely payeven more in the fourth quarter -- per-haps as much as $400 -- due to risingoil prices.

Yanukovych was expected to arrive inMoscow on 24 September. "We havebig hopes. We believe this visit will laythe ground for a new gas contract,"Azarov said. "We should receive a goodcontract which must also satisfy Rus-

sia," Azarov added.Ukraine believes that a fair price for

Russian natural gas should be $230 per1,000 cubic metres, TV channel Interquoted Ukrainian Energy MinisterYuriy Boyko as saying on 17 September.Ukraine is currently buying the Russiangas at a higher price than other Euro-pean countries and the figure of $230was calculated in line with the price thatGermany pays Russia, minus transit feesacross Ukrainian territory, he added.

Meanwhile, Azarov said on 17 Sep-tember that Naftogaz will pay its nat-ural gas bills to Russia on time, thusavoiding a winter European supplyshutdown. "The gas contracts are dis-advantageous, but we (will) fulfil them... and will pay until we manage tochange the contract," RIA Novostiquoted Azarov as telling a news con-

ference in Yalta, Ukraine.Azarov said two weeks ago the gov-

ernment would dissolve Naftogaz andrevise arrangements it already has withRussia. Gazprom had wanted to mergewith Naftogaz, a move the Kremlinsaid would benefit Ukraine's recession-battered economy. Azarov saidNaftogaz could split into three separateentities as part of a restructuring set forOctober. "Naftogaz will be restructuredto emerge as a completely transparentnatural gas production company," hesaid. "If Russia decides to be part of thisventure -- it is welcome."

Ukraine's 10-year gas export contractwith Russia, signed in 2009, has re-sulted in a trial on abuse-of-officecriminal charges against former PrimeMinister Yulia Tymoshenko, whosigned the deal.

ENERGY|GAS

Kiev to compromise withMoscow to revise gas deal

Russian President Dmitry Medvedev, right, welcomes his Ukrainian counterpart Viktor Yanukovych at the Bocharov Ruchei residence inSochi, Russia, 11 August 2011. Yanukovych was expected to arrive in Moscow on 24 September to discuss a viable gas contract for Ukraine.|EPA/VLADIMIR RODIONOV/RIA NOVOSTI/KREMLIN POOL

By Kostis Geropoulos

ARTS & CULTUREPage 18 | New Europe


Germany - Bremen - Messe Centrum Bremen- 11-13 November 2011 HanseArt Is Celebrating Its 10th Anniver-saryThis year HanseArt will expand its offeringsto an even larger scale: 6.000 square meterswill accommodate about 150 artists andsome galleries from home and abroad topresent their works to art lovers and buyers.HanseArt thus proves to be one of thelargest art fairs in Germany for painters,graphic designers, photographers, and sculp-tors, integrated into the stately city center ofBremen. In keeping with HanseArt’s internationalreputation exhibits by German artists will befound side by side to those of representativesfrom more than 30 nations including Aus-tria, Belgium, The Czech Republic, Chile,

China, Denmark, France, Great Britain,Italy, the Netherlands, Poland, Russia. Asidefrom individual artists joint exhibits ofgroups, galleries, and art projects will be pre-sented. Our motto’Art from all Continents’ empha-sizes the many layers of differences betweenthe nations to be viewed at the exhibit.HanseArt has attracted artists not only fromEurope but also from Africa, Asia, North-and South- America. An expert jury will se-lect this year’s participants.The artists will encounter collectors, cura-tors, gallery owners and others considerablyinterested in purchasing works of art. For thevisitors HanseArt also is a chance to discoveryoung and promising talents. For someyoung artists this fair proved to be the start-ing point for their careers.

Kunstmesse HanseArt in Bremen

Art International Zurich 2011

Switzerland - Zurich - Kongresshaus -14 - 16 October 2011The 13th International Art Fair pro-poses in 2011 a selection of interna-tional and contemporary art, in an

exclusive location. The main focus in2011 is based on visual art from Asiaand outer Europe. The cultural impor-tance of the city of Zurich is enrichedand endorsed by 13 years ART IN-

TERNATIONAL Zurich. The an-nual fair is located in the prestigiousbusiness district close to the famous Pa-radeplatz and Bahnhofstrasse and inwalking distance to the major galleriesand museums. The fair aims to promote communica-tion, sales and contact between the ex-hibitors and the business, media,collectors and the public. Zurich hasbecome an important centre for art.For international and also domestic gal-leries and their wide range of artists thisevent is a contact between art buyers, artlovers and producers, as well as agents.A prestigious high-classed place inmidthe banking and gallery district directlyat the lake of Zurich. The organizers' concept of presentingmodern art of diverse styles in a centralcity location to a broad public has im-pressed visitors as much as exhibitors.One reason, why the fair has advancedto become a favourite of the public isthe fact, that contemporary and avant-garde art is traded at a wide range ofprice level. The fair aims to promotecommunication, sales and contact be-tween the exhibitors and the business,media, collectors and the public.

France - Paris - Musee d'art moderne dela ville de Paris- 18 October 2011 to 8January 2012Under the title Any Ever the Muséed’Art Moderne de la Ville de Paris ispresenting the first major exhibition inFrance by American artists Ryan Tre-cartin and Lizzie Fitch. For over fiveyears now the duo's videos, installationsand sculptures have been blowing con-

sumer culture and intergenerational rela-tions up to absurd proportions.Ryan Trecartin and Lizzie Fitch worktogether, the roles of each depending onthe project in question. For the videos,Trecartin writes the scenarios, directs theactors and does the editing, while Fitchtakes care of production. For the instal-lations, as well as the sculptures, made incollaboration, are at once flexible andspecific, with the details appearing in thecredits for the films and the other art-works.Over and above the creator/collaboratorrelationship, their work involves the in-vention of a new form of connective cre-ativity. In his videos Trecartin functionsas a kind of one-man-band, although thecontributions from his friends are trueindividual performances. The charactersintermingle, merge and subdivide, withgender, age, appearance and function asrandom factors whose permutationsserve as triggers for his fictions.Any Ever is an expanding universe, oneyou can enter only by consenting to re-consider the codes of the real world andthe rules of language. At ARC thethree-part Trill-ogy Comp (2009) andthe four films making up Re’SearchWait’S (2009–10) are viewed in roomsdesigned to be inhabited like a theatrestage; this gives each video a space ofits own in which sound is a value in itsown right.

Netherlands - Rotterdam-Museum Boijmans Van Be-uningen - until 20 November 2011The Italian artist Fred Carasso (1899-1969) spent his lastthirty-five years in the Netherlands. He achieved recog-nition principally as a sculptor, but he was also a passion-ate draughtsman. This autumn Museum Boijmans VanBeuningen is exhibiting a selection of his works on paper. Museum Boijmans Van Beuningen recently received alarge part of the Italian-Dutch sculptor Fred Carasso’sworks on paper on long-term loan. This autumn the printroom is presenting more than forty drawings, collages andgouaches by the artist. The selection is complemented byseveral small sculptures. The works on paper are extremelydiverse in style and technique and demonstrate the artist’sgreat adaptability and empathy. Carasso’s social vision is arecurring element in his extensive oeuvre.

Sculptor Fred Carasso in Print Room

[email protected]

Ryan Trecartin and Lizzie Fitch - Any ever

Vilmantas, "Lost in the moonlight", 125 x 100 cmCourtesy by galleri NB, Viborg / Denmark

Ryan Trecartin Negative Beach + Lizzie Fitch 2010c-print, 91.4 x 61 cm Courtesy the artist and Eliza-beth Dee, New York Photo: Sebastian Kim

FASHION & STYLENew Europe | Page 19


After New York comes Londonfashion week and so does thehappy print mania that will lead

the way to next summer. After the ‘land-

scape dress’, ‘body as canvas’ concept andother ‘trompe l’oeils’, the use of printsand mix-matching of textures and colorsseem to have reached maturity, throughsimpler shapes and less literal references,proving London’s ‘golden children’s’ po-tential to offer new perspectives in anage-old field.

For her sixth collection, Mary Ka-trantzou tackled with ‘the contrast be-tween natural and man-made, artificialagainst organic, industrial fabricationversus the inherent beauty of nature.’ Ka-trantzou depicts the world she sees: ex-cessive vegetation, intrusive flowerbeds inviolent and pixilated colors expressingthe never-ending life cycle and its echo,the repetitiveness and artificial perfectionof industrial production. Tin cans, metaldrums, microphones, car parts are used asprints to portray the wrecks left behind,while nature is felt through the fishscales, bird feathers, coral reefs and fo-liage. Mary Katrantzou proves her confi-dence in taking up challenges andsurprises us with a fresh approach eachseason.

The duo Christopher De Vos andPeter Pilotto for their brand Peter Pi-lotto also fell under the spell of tropicalvegetation, submarine wildlife, and exoticelements, tidal waves, coral reefs and jun-gle plants, all inspired by a recent trip toIndonesia. An amazing collection, in-deed, as each print, whether it was fish,reptile scales or flowers, was designed for

a specific piece. Summer sportswear de-tails like scuba diving neoprene trims andplastic zips add a modern touch to thisultra-young sophisticated collection!

Australian designers Sarah-Jane Clarkeand Heidi Middleton or respectively Sass& Bide, carried on the tribal and ethnicinfluences they are best known for in theirnew collection: ‘Seekerstate’. Geometricbeaded designs, animal prints and deco-rative ‘friezes’ all coexisted, but this timein neon tones, splashing orange, acid yel-low or electric blue, somewhat softenedby white and black polka dotted or stripedprints. Their sharp tailoring hints atsportswear and so do the colored braceletsand necklaces in similar tones, as goodhumor and eternal youth prevail.

In a similar spirit, David Koma ‘s tat-too-inspired prints uncover and cover thebody with artistry. White and black areused as blocks of color while cutouts andpastel motifs, the negative spaces in be-tween, give Koma’s collection a sexy re-fined touch…more ‘sweet tribal girl’ than‘amazon’.

Michael Van Der Ham further developshis collage technique by mixing custom-made materials and fabrics from variousorigins and times, expressing his admira-tion for Surrealist designers like ElsaSchiaparelli: scarves, bits and pieces offabric and color are ‘pinned’ onto mainshapes to produce a trompe l’oeil effect insoft colors and without lacking a note ofhumor…nothing stiff or conventional,

just lighthearted and elegant!Louise Gray’s very special talent lies in

her ability to associate odd little objectsthat appear to have been found andpicked out at random, while arrangingthem to form a poetically agreeable en-semble. As an embroiderer, Gray juxta-poses motifs and techniques as shecombines shiny surfaces with matt onesand pastels with flashy colors in a singlelook, but acutely and artfully.

Louise [email protected]

MICHAEL VAN DER HAM© Michael Van Der Ham

MARY KATRANTZOU© Mary Katrantzou

PETER PILOTTO© Peter Pilotto

DAVID KOMAphoto: Stuart Wilson/Stringer

© Getty Images

LOUISE GRAY© Louise Gray

SASS & BIDE© Sass & Bide

Swirling Whirling London

LONDON FASHION WEEK: SPRING/SUMMER 2012

BRUSSELS AGENDA Page 20 | New Europe | NEW EUROPESeptember 25 - October 1, 2011

BRUSSELS AGENDA New Europe | Page 21

NEW EUROPE September 25 - October 1, 2011Welcome to NE’s Brussels Agenda. All youneed to know for a complete professionaland personal life in Brussels.

Would you like to advertise in New Europe’s BrusselsAgenda? Ask for more info [email protected] ordon’t hesitate to call us at +32(0)2 5390039

An initiative of the Foundation for the Arts, Brussels

LAST MINUTE TICKETS FOR SHOWS & CONCERTS AT -50%

Avec le soutien de LA COMMISSION COMMUNAUTAIRE FRANÇAISE

Tickets for half price for performances and concerts on the same day. Arsène 50 offers you every day a wide range of performances, advises you in your choices and takes care of your reservation.

www.arsene50.be

Ticket sale: - At BIP, 2-4 rue Royale (Place Royale) 1000 BruxellesTuesday to Saturday, from 12.30 pm to 5.30 pm- Online on www.arsene50.beTuesday to Saturday, from 2 pm to 5.30 pm

Salle à l’étage ● Banquets - réunions - Terrase en été

Cosmo Cuisine

Av. de Tervueren,1051040 Etterbeek - Bruxelles

Tel: 02/ 732 43 31Fax: 02/ 733 61 17

Unfinished Symphony Brussels Agenda 26 September - 6 October

TAKE A LOOK

The Galeries Royal Saint Hubertshopping area provides a unique andexciting experience. At the Galeriesone can find chocolate and lace sta-ples of Belgian craft. The Galeries aresplit between the King's and theQueen's galleries and both offer awide range of delicacies. Don't missthe wonderful restaurants and thechance to shop for Belgian treasures.Located between Marche auxHerbes and Rue des Bouchers, thegallery promises to be provide a dayof fun and excitement.

29 Sept - Greening the Economy: WhatImpact on the Quality of Work10:30-15:00, International Trade UnionHouse (ITUH), Boulevard du Roi Albert IIThe seminar will present and discuss inputsfrom the WALQING study in the constructionand waste sectors and provide the opportunity toexchange views with stakeholders, polices andstrategies both on EU and national level aimingto improve the quality of work in services.Among the speakers in the seminar would berepresentatives of the European Commissionand the social partners at EU level.

29 Sept - Introducing Insight South AsiaSurvey And Presentation Of The FirstResults In Nepal Launch of the Insight South Asia surveyproject, revealing findings from Nepal.

5 OCT - Innovation Forum 12:00-17:00, Royal Academy of Science,Humanities and Fine Arts, Salle du Trône,Rue Ducal 1EU leaders have made boostinginnovation one of their main pri-orities for the next decade. InOctober 2010 the European

Commission announced the launch of an“Innovation Union” whose aim is to unlockEurope's potential for innovation.

6 Oct - Sources of Growth in EuropeConference (Registration is required)9:30-17:00, European Commission,Berlaymont Sessions on the future of the European eco-nomic and social mode, and re-launchinggrowth in Europe, which way forward?

6 Oct -The participation of SMEs in the valuechain - Core business or extended value chain?14:30-17:00 , EESC, JDE Building, Room52, 99 rue BelliardTaking place just one day before the mainevent of the European Commission, thishearing aims to examine what makes SMEsdecide to extend their value chain and gobeyond their core business or on the contrary,what makes them decide to concentrate sole-ly on their core business.

28 Sept to 1 Oct - Sufi NightCentre for Fine Arts, Rue RavensteinSufi Night brings together a number of dif-ferent Brussels communities with its focuson the ecstatic music of the mystical tradi-tion in Islam.

29 Sept to 15 Dec - The Nocturnal NightsLocations this Thursday: BibliothecaWittockiana - Musée de la Reliure et desArts du Livre, NEW Maison Autrique (La),Maison Cauchie, Musée CamilleLemonnier, Musée d'Art religieux moderne,Musée des Soeurs noires, NEW Musée desTechniques AnciennesEvery Thursday night, from 17:00-22:00,the Nocturnal Nights lets people explore dif-ferent museums for 3 or 1.5 (under 25 yearsold) Euro. Great for after work and school.

1 Oct - Guided tour King BaudouinStadiumAvenue de MarathonThe guide takes visitors around in places thatwould otherwise never be accessible to thepublic: the press room, the dressing rooms ofthe Red Devils, the doping control room, thesecurity tower,... Visitors learn how the

largest stadium in Belgium works and whatthe different workers do exactly.

The visit lasts 1 hour. Booking is required(minimum 6 participants). The visits are inDutch and French. Prices are €8 for adults,€7 for people over 65 and disabled, €5 forchildren aged 3 to 16 years, free for childrenunder 3 years

2 Oct onwards - BOZARSUNDAYSCentre for Fine ArtsSunday morning with the family at theCentre for Fine Arts: for big and small,young and old, BOZARSUNDAYS hassomething to slake every kind of artisticthirst. It is all laid on: breakfast, activities forchildren, exhibitions or concerts for theadults (or a film for the whole family), and,above all, lots of atmosphere!

2 Oct - Images & Folie20:00, BozarWhen Brahms’ Symphony No. 1 was firstperformed in 1876, some critics sarcasticallylabelled it as ‘Beethoven’s 10th’. WhileBrahms was inspired by the Viennese classi-cal tradition, he also managed to reconcile

the compact nature of its themes with theromantic sound idiom in a highly personalmanner. Pierre Bartholomée frequentlyexpresses his indebtedness to Debussy: in hisworks he also explores all the nuances ofsound available to an orchestra.

3 Oct - Royal Republic20:00, Ancienne BelgiqueRoyal Republic is an alternative rock bandfrom Sweden, formed in 2007.

5 Oct - Avant & Premiere La Source desfemmes (presence of the director)20:00, Centre for Fine Arts, Henry Le BoeufHallThe story takes place in current times, in asmall village somewhere between NorthAfrica and the Middle East. The womenfetch water from a mountaintop spring inthe blazing sun. They’ve done that since thebeginning of time. Leila, a young bride, urgesthe women to launch a love strike: no morehugs, no more sex until the men run waterinto the village.

6 Oct - Dyptich Series - Jérôme Latteur10:00-21:00 , Centre for Fine Arts

In 2007 the Belgian photographer JérômeLatteur found inspiration for a series of dip-tychs in the Centre for Fine Arts. Dreamlikeinteriors in black and white can be seenalongside monochrome pictures that zoomin on material textures. Jérôme Latteur’swork offers an unexpected angle on the inge-niousness of Horta’s architecture and han-dling of detail.

PLAYsuggest your event for our agenda: [email protected]

RESTO BITES

Nakama Rue Jordan 7

This fine Japanese restaurant serves top-class sushi butthere’s a lot more to it that just raw fish. As the co-ownerWang Ge points out, a lot of misunderstanding still existsabout Japanese cuisine. “People think it consists solely ofraw fish but that isn’t the case at all,” he said. To prove thepoint, the air-conditioned restaurant he runs serves a vastarray of other Asian dishes, all of them delicious.Particularly recommended is that good old staple of anyAsian eatery – dim sum – along with the beef, chickenand curry dishes. It is open seven days a week and seatsabout 100 people in contemporary surroundings. Therestaurant is in a bustling street, just off Avenue Louise,which is probably best known for its collection of Italianrestaurants. But if you want to try something differentfrom pasta and spaghetti, this is the place to head.

30 September 20:00Centre for Fine Arts RueRavensteinExperience the mysticalreligious music fromAlgeria, Pakistan, andTurkey in the Sufi tradi-

tion. While the music isfrom different nationsand cultures, the commonthemes of the perfor-mance focus on how thebelieve can become onewith the divine. The

music of Ahmet Ozhanfrom Turkey, a member ofthe Mevlevi order, con-centrates on the teachingsof Rumi, a poet and the-ologian. Pakistan will berepresented by Asif AliKhan who will performQawwali, the Sufi musicof South Asia. Finally,Orchestre Radwan deTlemcen from Algeriawill draw their musicalinspiration from mysticaltexts written by Sufi poetsdating back to the 12thcentury. The concert pro-vides a rare and uniqueopportunity to experiencea religious music in a dis-tinct and diverse setting.

Sufi NightsWORK

suggest your event for our agenda: [email protected]

This fall Arctic Accents will come to theBenelux region in an attempt to promoteFinnish music and artists.The program aggregates existingFinnish concerts into a central databaseand label in order to better communicateand promote the events. Henna Salo ofthe Finnish Music Information Centre(FIMIC) said that more and moreFinnish music in the area warrantedArctic Accents.“It is really important to expand whatpeople know about Finland,” Salo said.Arctic Accents lists and promotes con-certs by Finnish musicians in coopera-tion with various venue partners includ-ing the Ancienne Belgique and Vooruitin Brussels. Arctic Accents does notbook the concerts, but they includeinformation and help the venues in pro-moting the group.Concerts coming to Brussels include

Uniko and Varttina both at theAncienne Belgique. There also will beFinnish music acts at popular festivals inthe Netherlands and Luxembourg.Salo stressed the importance of spread-ing Finnish music to the region as wellas expanding the music beyond the genreof heavy metal. Arctic Accents featurespop, jazz, and classical music.Arctic Accents will run from Septemberto December of this year. All in all therewill be over 60 events under the umbrel-la of Arctic Accents in the Beneluxregion.After the program ends in DecemberSalo said they plan to go further and addmore concerts to their line up and tomake better partnerships with theirvenues.Visit www.arcticaccents.fi for moreinformation on concerts and promotions.

El Fish1 October 20:00Ancienne Belgique

El Fish got their start in the late 90s and performed at the Marktrock in 2000. TheLeuven concert that year established the band as a premier blues band of the previousdecade. In 1998, El Fish won the Zamu Award for Best-Live Act. After the turn of thecentury, subsequent albums, and tremendous success the band went their own way untilthey reunited at a party in 2010. After ten years of downtime, the band members pickedup their instruments again and returned to the blues. The concert at the AncienneBelgique promises to be an exciting adventure and a large chapter in the reunion of ElFish. Band members Steven De Bruyn, Filip Casteels, Jan Ieven, Rohal De Ridder, andToon Derison bring the blues to Brussels one more at this extraordinary concert.

IN THE BLOGSPage 22 | New Europe | NEW EUROPESeptember 25 - October 1, 2011

A round-up of interesting blog posts ofthe past week, because bloggers deservetheir voice.

Read a blog post that you want to suggestfor our new ‘In The Blogs’ section? Send us an email: [email protected]

The Commissioner for FinancialProgramming and Budget, JanuszLewandowski, has been held up by theruling Civic Platform Party in Poland asa means of getting the country a lot moremoney from the EU budget:"Speaking in a wood-panelled roomamong fellow Civic Platform members,Lewandowski says: "We're talking aboutbillions, even 300 billion zloty [€69 bil-lion]. Thanks to this money we couldreduce youth unemployment, even byhalf."

Fellow party member and foreign minis-ter Radek Sikorski then pops up, adding:"That's what these elections are about.They are about money for Poland andwho will get more of it. Why do we thinkwe will do better? Because we have astrong team [gestures to Lewandowski]

which can negotiate successfully.""

This has raised questions over theCommissioner's oath of independence,which Commissioners give when they aresworn into office to pledge that they willwork in the general interest, and remainindependent of national governments.EUObserver has reported that theCommission asserts that this was in linewith the Commission's Code ofConduct:"Commission spokeswoman PiaAhrenkilde Hansen on Tuesday (20September) said he did not cross the linebecause his remarks were of a "general"nature.

"The president [Barroso] is aware of theparticipation of the commissioner in thisspecific activity and it's our opinion thatthe commissioner, who intervened in apersonal capacity, passed a very general

message about the benefits of the generalbudget to Poland ... This activity, forwhich the commission punctually gave itsagreement, is compatible with the code ofconduct," she said."

Having a "national Commissioner" is abig issue. While there are far too manyCommissioners, reatining one perMember State is a sticking point that isunlikely to go away soon - the prospectiveloss of a Commissioner for 10 out ofevery 15 years was a major reason for theIrish rejection of the Lisbon Treaty in thefirst referendum, despite equal treatmentof the proposed rotation ofCommissioners between big and smallMember States. Though theCommissioners may swear indepen-dence, they are generally held to be anational voice in the College ofCommissioners.

At the moment Commissioners are nom-inated by national governments,* accept-ed by the Commission President elect,and elected by the European Parliament(as part of the Commission as a whole),with the Commission being accountableto the EP between elections. The inde-pendence of the Commission, and theindividual Commissioners could bestrengthened by bringing an end to thenational nominations. So while therecould still be one Commissioner perMember State, the choice of who theCommissioner actually is would be forthe Commission President and theParliament to decide. However, thiswould require a treaty change.

*The Council adopts a list ofCommissioners based on the suggestionsof Member States which are effectivelyMember State nominations in practice.(Art. 17(7) TEU.

Our Commissioner, for a given value of "our"...

eu2012.dk - Danish EU presidency logo At the moment, Poland holdsthe rotating presidency of theEuropean Union. Next in lineis Denmark, who are takingover on January 1. WhilePoland unveiled their presi-dency logo in May, Denmarkannounced their logo over ayear before taking the presi-dency. The Ministry ofForeign Affairs and theDanish Design Centre (DDC)

arranged a contest to select thepresidency logo, and the win-ner was presented on October11, 2010.The contest attracted 71 sub-missions from designers andgraphic artists, and the winnerwas selected from seven final-ists. The winning submissionwas created by Peter JacobMøgelvang from Kunde&Co.A jury statement described it

as "an aesthetic and creativetypographic solution, which inits simplicity is a clear expres-sion of Danish design tradi-tion". The "half-digits" repre-sent the Danish half year atthe presidency, and rotatingdigit represents the rotatingnature of the presidency.Denmark last held the EUpresidency in 2002, using thelogo seen below:

By: EurocentricFrom: http://tinyurl.com/neweurope510

By: The Branding SourceFrom: http://tinyurl.com/neweurope511

The winner got 100.000 DKK (about €13.000 or $19.000).Two runner-ups where also presented: The second prize went to Robert Daniel Nagy (MDD). Using intertwined

letters in "Danish red" and "European blue", its expresses dialoguebetween different points of view.

The third prize went to Peter Stephensen (Make). This submission fea-tures four speech bubbles that make up a Danish flag, once again anexpression of dialogue from different perspectives.

FRANCE · GERMANYNew Europe | Page 23THE EUROPEAN UNION


Air Berlin, Germany’s second-largest airline,is announcing dramatic savings plans to im-prove its results by €200 million a year, by re-ducing its fleet from the current figure of 170to 152 by next summer, The Local reportedon 21 September. The idea is to only reducethe company’s flights by four percent – re-quiring an increased productivity from eachplane.

The programme, dubbed ‘Shape & Size’,drastically expands the idea launched abouta month ago, to reduce its fleet by eight ma-chines and cut unprofitable routes from thetimetable. The idea mooted then was towithdraw from regional airports, pullingback to the hubs of Berlin, Düsseldorf,

Palma de Majorca and Vienna.Air Berlin chairman Joachim Hunold re-

signed last month after announcing a loss of€32 million in the second quarter of the year,up from the € 28 million lost in the firstquarter. Reports then suggested that a sav-ings plan would reduce capacity by morethan half a million seats in the second half ofthis year, and at least a million more wouldbe cut next year. Now Hunold’s successor,former Deutsche Bahn chairman HartmutMehdorn, and Air Berlin finance chief UlfHüttmeyer said last Tuesday that the uncer-tain economic situation made it difficult tomake any certain prediction for the rest ofthis year.

Air Berlin to save €200 mln with reduced fleet

GERMANYAIRLINES INDUSTRY

German industrial giant Siemens withdrewover €0.5 billion in cash deposits from a largeFrench bank two weeks ago and put it in theEuropean Central Bank, Britain's FinancialTimes reported on 19 September, cited by dpa.The paper said the group withdrew the money"partly because of concerns about the future fi-nancial health of the bank and partly to bene-fit from higher interest rates paid by the ECB."The report said it was "not clear" from whichbank Siemens withdrew the money but that aperson familiar with BNP Paribas said the

country's top bank was not concerned. Askedabout the report in a French radio interview on20 September BNP Paribas Chairman MichelPebereau said: "I know absolutely nothingabout it." Siemens is one of a handful of com-panies that have licenses allowing them to de-posit cash directly with the ECB, according tothe Financial Times. In total, the group de-posited between €4bn and €6bn at the bank,mostly through one-week deposits, the report,which quoted an anonymous source withknowledge of the affair, said.

Siemens withdraws over €0.5bn from French bank

FRANCEBUSINESS

A day after the European Com-mission said some banks mightneed a capital injection, FrenchBudget Minister Valerie Pecressesaid on 21 September that Frenchbanks were "solid" and didn't needrecapitalising.

"There is no problem of solvencyor liquidity at French banks.French banks are solid," RMCradio and BFMTV quoted Pecressein an interview, cited by dpa. Lastmonth International MonetaryFund (IMF) chief Christine La-garde called for European banks tobe recapitalised in order to protectthem from the Eurozone debt cri-sis. EU officials at the timeshrugged off her call, saying thebanks were "significantly bettercapitalised now than a year ago."

But on 20 September EU Com-petition Commissioner JoaquinAlmunia acknowledged that "asthe sovereign debt crisis worsens,more banks may need to be recap-italised" on top of the nine thatfailed recent stress tests.

The French government andcentral bank hitherto repeatedlyassured that French banks -- themost exposed of European banksto Greece's sovereign debt -- werefinancially sound.

Their assurances however failed

to reassure investors, who werecontinuing to dump shares in BNPParibas, Societe Generale andCredit Agricole on 21 September.Societe Generale thus far lost over60% of its share value since the be-ginning of February.

Minister: French banks don't need recapitalising

FRANCEBANKING GERMANY|TAXES

Cabinet approves tax deal onmoney hidden in SwitzerlandGerman Chancellor Angela Merkel's cabinet ap-proved a double-taxation deal with Switzerland on 21September, aiming to end a long-standing disputeover tax and banking secrecy, The Local reported. Theaccord, due to be formally signed by the two financeministers in Berlin later in the day and come intoforce in 2013, could net billions of euro for the Ger-man taxman and snare up to 1,000 tax cheats over twoyears. As of 2013, German citizens with assets parkedin Switzerland's notoriously secretive banks will pay atax rate of 26.4% on these holdings but will be able toremain anonymous. Germans who have been avoid-ing tax by hiding their money in Switzerland since atleast 2000, will have to pay a rate of between 19 and34%, depending on how much they have and howlong it has been hidden. As part of the agreement,Swiss banks will pay two billion Swiss Franks (€1.64billion, $2.24 billion) to the German tax authorities. This will gradually be repaid by the German author-ities - from monies paid by the new tax-payers. Thisis intended to increase the incentive in Switzerlandto pressure clients to stump up. According to Ger-man media, up to €180bn in German assets are hid-den in Switzerland, meaning the tax proceeds forBerlin could be as high as €54bn. The accord aims toclose a dispute between the two neighbours that blewup in July 2010, when German authorities raidedbranches of Credit Suisse bank after buying data onsuspected tax dodgers. The deal now needs to be ap-proved in both countries' parliaments, with the oppo-sition in Germany already vowing to block it, angrythat the accord allows tax evaders to stay anonymous.

French Budget Minister Valerie Pecresse takes the floor during the questions and answers period atthe National Assembly session, in Paris, France, 7 September 2011.|EPA/HORACIO VILLALOBOS

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UNITED KINGDOM · IRELANDNew Europe | Page 24 THE EUROPEAN UNIONSeptember 25 - October 1, 2011

Luxury carmaker Jaguar Land Rover ( JLR) announced anew investment of £355 million to build low-emission en-gines at a site in Wolverhampton, in the British Midlandsindustrial region.

The announcement follows a remarkable turnaround forJaguar - which is owned by Indian firm Tata – which hasbeen boosted by strong exports to markets in India andChina.

The company reported pre-tax profits of £1.1 billion inthe year to the end of March, up from £14.6 million theprevious year. Revenues increased by 51% to £9.9 billion.

The manufacturing facility at Wolverhampton wouldcreate up to 750 highly skilled engineering and manufac-

turing posts, along with hundreds more highly skilledmanufacturing jobs in the supply chain, said Ralf Speth,CEO of Jaguar Land Rover.

"As we invest £ 1.5 billion a year for the next five yearsin new product developments, expanding our engine rangewill help us realize the full global potential of both ourJaguar and Land Rover brands," he added.

Tata Motors, controlled by billionaire Ratan Tata,bought the company from Ford for £ 1.5 billion in June2008. At the Frankfurt International Motor Show lastweek, the company unveiled three new concept cars, in-cluding a new version of the Defender and an eagerlyawaited two-seater Jaguar sports car.

Jaguar Land Rover invests in low emissions

UNITED KINGDOMAUTOMOTIVE

Dublin based company Petroneft said it has made another oil find at its Licence 61 at Tomsk Oblast in Russia.

The find came after drilling at North Varyakhskaya.Petroneft described the oil find to be of "good quality.''

CEO Dennis Francis said the new field, while small in com-

parison to its recent find at Sibkrayevskaya, was important be-cause it could be easily tied into already planned infrastructureat "minimal cost.''

Petroneft last month said that its Sibkrayevskaya find, also inLicence 61, was its largest single discovery so far.

New Russian oil find for PetroneftIRELANDENERGY

Debenhams, Britain's number two de-partment store group, said it would beatforecasts for full-year profit and net debtafter price cuts drove sales and won amarket share in a tough trading envi-ronment.

Debenhams, which trades from 169stores in Britain, Ireland and Denmark,and 64 franchised outlets in 25 countries,said it expected further progress nextyear.

"In this sort of market there are in-evitably winners and losers and I believeDebenhams is well positioned to con-tinue to be one of the winners," saidchief executive Michael Sharp, who suc-ceeded Rob Templeman earlier this

month.Debenhams, ranked second after em-

ployee-owned department store chainJohn Lewis, said while its gross marginfor the 53 weeks to 3 September wouldbe flat to slightly down versus last year,underlying pre-tax profit should beahead of a market forecast to about £158 million.

The company said that its debt bythe end of the year would be about £385 million, down £ 130 million sincethe start of the year and comparedwith previous forecasts for about £400 million. The company's strategyis to drive cash margin by investingsome of its gross margin into push-

ing top-line sales.Debenhams is also targeting growth

from new stores and store refurbish-ments as well as internet initiatives andoverseas. It said sales at stores open overa year, excluding VAT sales tax, were up0.4% in the nine weeks to 27 August butdown 0.3% over the full year. Total full-year sales were up 2.9%.

Riots in English cities and towns inAugust did not have a material impacton business. UK consumers' purchasingpower is being squeezed by higherprices, muted wage growth, a lack ofcredit, job insecurity, a stagnant housingmarket, government austerity measuresand fears of eventual interest rate rises.

Debenhams trades its way to profitUNITED KINGDOMBUSINESS

IRELAND | BUSINESS

Pfizer to invest more in IrelandPharmaceutical company Pfizer is set to invest €145 millionat its Dublin site. The company said it would expand its pro-duction and product testing facilities at the plant, accordingto RTE Ireland. They further estimated that up to 400 con-struction jobs will be created during the peak constructionperiods at the plant. The Dublin site currently employs about1,100 full-time staff. It is one of the largest bio-tech manu-facturing sites in the world and produces two of Pfizer's maindrugs, Enbrel and Prevenar 13. Taoiseach Enda Kenny wel-comed the news and said the investment is a further demon-stration of the company's continuous commitment toIreland. ''This investment gives a substantial boost to Ire-land's Life Sciences sector and is a vote of confidence in Ire-land's attractiveness as a location for bio-pharmaceuticalmanufacturing,'' said IDA Ireland's chief executive BarryO'Leary. Pfizer has about 4,300 workers across eight loca-tions in Cork, Dublin, Kildare and Limerick.

UK | BUSINESS

SABMiller to buy Foster'sBritish-based brewing giant SABMiller has agreed to buyFoster's Group for an increased price of $5.10 a share. Thedeal values the Australian beer-maker at $ 10.2 billion andpropels SABMiller at the head of Australia's beer market. As part of the deal, Foster's will also return $0.30 a shareas well as a final dividend for the year to June 2011. Thetotal value of the deal, including debt, is $11.5 billion."We are pleased that we reached agreement on a recom-mended transaction to be put to Foster's shareholders,"said SABMiller chief executive Graham Mackay. TheLondon-based brewer of Peroni, Miller Lite and Grolschlaunched its initial cash bid worth $9.5 billion, or $4.90a share, on 21 June and then went hostile by taking theoffer direct to shareholders at the same price on 17 Au-gust, but Foster's rejected both approaches as being toolow. SABMiller said the bid is part of its strategy of cre-ating an attractive global spread of businesses to add to itsoperations largely in the emerging markets of Africa,Latin America, Asia and Eastern Europe. It has beenlong seen as the favourite to take over Foster's with otherbig brewing rivals saddled by high debts after recent deals.Foster's is seen as attractive due to its high profit marginsand dominant position in Australia although beer vol-umes have sagged recently with a poor summer and aconsumer downturn.

IRELAND | BUSINESS

Alkermes sets up shop in IrelandAlkermes set up its corporate operations in Ireland, with itsnew headquarters located in Dublin. Alkermes was cre-ated after the merger of Alkermes Inc with Elan DrugTechnologies, the manufacturing business unit that wasformerly part of Elan Corporation. The company has morethan 450 employees based in Ireland at its Dublin head-quarters and at the former Elan plant in Athlone, CoWestmeath. The company has over 20 commercial drugproducts and a substantial pipeline of future productswhich treat central nervous disorders such as addiction,schizophrenia and depression. Alkermes on 19 Septemberannounced a major manufacturing agreement with one ofthe world's top ten pharmaceutical companies. Under theterms of the deal, Alkermes will manufacture the com-pany's finished pharmaceutical product which will be pro-duced at its Athlone plant. The company expects the dealto generate $ 15-20 million in annual manufacturing rev-enues by 2016.

The Jaguar C-X16 is seen after its presentation at the International Motor Show IAA in Frankfurt Main, Germany on 12 September. |EPA | Marc Tirl

ITALY · SPAIN · PORTUGAL

New Europe | Page 25THE EUROPEAN UNIONSeptember 25 - October 1, 2011

Government to tax the wealthiest to fight deficitSpain would introduce a special prop-erty tax for taxpayers with assets worth€700,000 ($959,000) or more, Econ-omy Minister Elena Salgado recentlyannounced. The "tax on the rich," as itis popularly known, will concern about160,000 taxpayers. It is expected tobring around €1.08 billion annually to

state coffers. A similar wealth tax ex-isted earlier, but it was abolished in2008.

The new tax, yet pending govern-ment approval, would be in force in2011 and 2012. It forms part of Spain'sefforts to cut its budget deficit from9.2% in 2010 to 6% this year. The gov-

ernment also announced that it wastaking new measures to make thelabour market more flexible. The par-liament was due to approve a reformfreeing employers from the obligationof giving stable work contracts to em-ployees who have been on temporarycontracts for more than two years.

SPAINECONOMY

On 22 September, Italy's Banking Asso-ciation (ABI) President Giuseppe Mus-sari downplayed a decision by Standard& Poor's to downgrade the credit ratingof seven of Italy's leading banks. "Weconsider that these are seven banks thathad a relatively high (credit) rating andhence the downgrading does not deter-mine grave consequences," Mussari wasquoted as saying by the press. A day ear-lier, S&P lowered its long-term ratingson the seven banks - including IntesaSanpaolo and Mediobanca - giving themall negative outlooks. The outlooks oneight other banks, including UniCredit,were also lowered from stable to negative,though their ratings were left unchanged."We have to read carefully the (S&P) re-port, but let's say that what happened wassomething possible," Mussari added.

S&P's decision did not come as a sur-prise to market analysts given the banks'investment in Italian government bonds,which in recent weeks have been hit bydoubts over the state's ability to repay itshuge public debt - the third-largest in theeurozone. "The banks hold many gov-ernment bonds that have declined invalue. This worsens their financial posi-tion," said Luca Peviani of the Invest-ment Company P & G SGR.

S&P's ratings on the banks came twodays after it lowered Italy's creditwor-thiness. Italian Prime Minister Silvio

Berlusconi's government criticised thedowngrading of Italy's credit rating, de-scribing the move as influenced bymedia reports and "tarnished" by polit-ical considerations. "Standard & Poor'sevaluations seem more dictated bynewspaper comments than the reality ofthings and appear tarnished by politicalconsiderations," Berlusconi's office saidin a statement. But Italy's centre-left op-position called on Berlusconi to take re-sponsibility for what it said was thegovernment's failure to address Italy'seconomic problems, and resign. "Ourcountry has been put in a corner and the

only way to get out of it is for a govern-ment of national unity involving all themajor (political) parties," said EnricoFarinone of the main opposition Dem-ocratic Party.

On 16 September, Moody's ratingagency threatened to downgrade Italydespite Rome's newly-agreed austeritypackage. But it still rated Italy as "Aa2" -a level considerably better than S&P's"A". The downgrade means Italy mustpay higher interest rates to investors whoextend new credit, to compensate for therisk that it may not be able to repay onloans.

Banker shrugs off S&Pdowngrading

ITALYECONOMY

Portuguese Prime Minister Pedro Passos Coelho urged theEU to "speak with one voice" in order to dissipate "doubtsabout the future of Europe." "If Greece sinks, all of the Eu-ropean Union will be in danger," French daily Le Figaroquoted him as saying.

An aggravation of the Greek crisis would make Portugal'seconomic recovery more difficult, according to the premier,whose country followed Greece and Ireland in being bailedout by the EU and the International Monetary Fund (IMF).

Passos Coelho defended the austerity policies adopted byhis government since it took office in June, pledging that Lis-bon would meet its target of cutting the budget deficit to

5.9% this year. Many investors have been showing interest inPortugal's privatisation programme, according to the Por-tuguese premier. He said that beside the European investors,those from emerging economies such as China, Brazil andMiddle Eastern countries, were also showing interest in in-vesting in Portugal. Austerity will create recession in Portu-gal, Passos Coelho admitted. "The middle classes will have tomake important sacrifices," he said, describing that as "theprice to pay for a country which has overspent for a longtime." According to the premier, internal demand would re-main in red until the end of 2012, but exports would makeup for that trend.

PM urges EU to ‘speak with one voice’

PORTUGALECONOMY

ITALY|GOVERNMENTLawmakers vote against arrest of Berlusconi ally On 22 September, Italy's lower house of parliament votedby a slim majority against a request by prosecutors to arrestan associate of Prime Minister Silvio Berlusconi on chargesof corruption. The result of the secret ballot was 312-305votes to maintain Marco Milanese's parliamentary immu-nity. Prosecutors charge that Milanese, a former aide toEconomy Minister Giulio Tremonti, is part of an allegedsecret cabal aimed at securing kickbacks and influence instate institutions. Berlusconi's People of Freedom party, ofwhich Milanese is a member, had objected to the secret bal-lot, one in which party whips have less control over indi-vidual parliamentarians. Berlusconi's conservative coalition,which has a slim majority in the Chamber of Deputies, splitin July over a similar vote. The result was the lifting of theparliamentary immunity and subsequent arrest of anotherPeople of Freedom member, Alfonso Papa.

SPAIN|ECONOMYSpain expects 0.2% economic growth in Q3The Spanish economy is likely to grow 0.2% in the thirdquarter in relation to the previous quarter, Prime MinisterJose Luis Rodriguez Zapatero recently announced. Growthwould thus remain on the same level as in the second quar-ter. The government was not certain of meeting its target of1.3% growth for the entire year, Zapatero told parliament.That depended on the international tensions sparked bythe Greek financial crisis, he added. Spain has been one ofthe countries most affected by market turbulence in the re-cent weeks. The ratings agency Fitch meanwhile said itmight downgrade Spain's AA+ credit rating. Slow growth,a failure by Spain's regional governments to meet deficittargets and a larger-than-expected use of public funds torescue banks were warning signals, Fitch Ratings DirectorDouglas Renwick said.

PORTUGAL|ENERGYGalp Energia starts Lula-Mexilhao pipeline Portuguese energy company Galp Energia, which is apartner of the consortium for BM-S-11, with Petrobrasand BG Group, started on 16 September operations ofthe Lula-Mexilhao gas pipeline in Brazil, which connectsthe Lula field to the Mexilhao platform, located in San-tos basin shallow waters, being strategic for the develop-ment of the pre-salt oil production of that basin. TheLula-Mexilhao gas pipeline has a total capacity of up to10 million cubic metres of natural gas per day, an exten-sion of 216 kilometres), a diameter of 18 inches and anoperating pressure of 250 bar.

PORTUGAL|RETAILSonae opens Zippy store in TurkeySonae, a Portuguese retail company with two major part-nerships in the shopping centres and telecommunicationssectors, opened the second Zippy store in Turkey. With anarea of 450 square metres and 11 staff members, the storenow opened at the Istanbul Forum Shopping Centre willsell clothes, footwear, accessories, baby care, furniture andtoys, Sonae said in a press release. Zippy currently holds 96stores around the World, of which 40 are in Portugal, 47 inSpain, five in Saudi Arabia, two in Turkey, one in Egyptand one in Kazakhstan. The first Turkish Zippy store wasinaugurated this past June, also in Istanbul.

Italian Prime Minister Silvio Berlusconi (L) and Minister for Institutional Reforms UmbertoBossi attend a session of the Lower House of the Italian parliament, in Rome, Italy, 22 September2011. |EPA/ETTORE FERRARI

AUSTRIA · SLOVENIA · MALTANew Europe | Page 26 THE EUROPEAN UNIONSeptember 25 - October 1, 2011

MALTA | ENVIRONMENT

Black dust problem has a culpritA report on the nature, distribution and likelysource of coarse black dust particles in Malta, hasconcluded that the Marsa Power Station was thelikely source of the problem that has intermittentlyaffected and created an inconvenience for residentsliving in the south eastern part of Malta. The re-port, which was undertaken by Professor Alfred J.Vella and a team working at the University ofMalta was commissioned by the Malta Environ-ment and Planning Authority (MEPA) in August2009, following an inconclusive investigation ithad carried out a year earlier, MEPA reported on20 September. The report anticipates that once theMarsa power station is decommissioned, deposi-tion of coarse black particles will very likely de-crease considerably. However, the fine black dustswhich motor traffic produces constantly and con-tinuously will continue to affect any area wheretraffic flows are high. Long-standing complaintsabout black dust have originated mainly fromFgura and other towns in the southern area of theGrand Harbour such as Paola and Tarxien, with aspate of complaints received in the summermonths of 2009. Vella's report is based on a study,which was carried out between August 2009 andNovember 2010 and its conclusions complementthe conclusions reached by another study con-ducted by the same author in 1995 on “limestonesurfaces in built-up environments as indicators ofatmospheric pollution” and published in an inter-national scientific journal. Given the large size ofthe black dust particles, the report concludes thattheir source is in close proximity to the areas whichare highly affected by its deposition. The mor-phology and chemical composition of the analyseddust infer that combustion of fuel oil is the likeli-est source of these soiling episodes and this, to-gether with Malta’s prevailing wind direction, allpoint to the Marsa power station as the constantmain source of coarse black dust particles, althoughother sources cannot be excluded.

SLOVENIA | TECHNOLOGY

State selling majority stake in FotonaThe state-owned PDP asset management firm putup for sale its 70.48% stake in high-tech companyFotona. The call for bids, published in the businessdaily Finance, is open until 10 October. PDP is sell-ing 463,570 Fotona shares, entailing 70.48% of vot-ing rights, in a package. The sale will be carried outin two phases. In the first phase, investors who willexpress interest will receive an information memo-randum and a notification on the bidding procedurebetween 17 and 28 October and will subsequently berequested to make their non-binding offers. PDPwill then decide which bidders will progress to thesecond phase, in which they will be enabled to carryout due diligence at Fotona. Subsequently, the bid-ders will be requested to submit their binding offers.PDP, however, reserves the right not to pick any ofthe investors and to change the bidding procedure.Fotona produces laser systems for medical, industrialand military purposes. According to PDP, the com-pany is a leading global producer of medical lasers aswell a leading company in innovation and research.The PDP is selling its stakes in some of the compa-nies from its portfolio, after it recorded a loss of € 28million last year.

Cabinet fails confidence voteSlovenia, already battling with excessivepublic spending, is facing snap polls afterPrime Minister Borut Pahor's cabinetfailed a confidence motion in parliamentlast Tuesday.

The vote in parliament was calledfor the confirmation of five new cab-inet ministers, appointed to replacethose who left amid a crisis in the rul-ing coalition.

Pahor and his Social Democrats clungto power months after they lost majoritysupport, but finally succumbed when theconfidence vote resulted in 36 votes forthe coalition, 51 against.

Pahor can delay the apparently in-evitable elections for another month,during which the Social Democrats maypropose another cabinet.

Success is, however, unlikely, as Pahor'sformer allies also said that they see earlyelections as the only way out of the cri-sis. Polls are expected on 4 December.

Pahor's policies hinged on his govern-ment's failed attempt to push through anambitious, money-saving pension re-form. It was overwhelmingly rejected ina referendum.

Following that failure, Pahor tried toput together a different spending cutspackage in order to keep Slovenia's bal-looning budget deficit and debts in

check. In the debate, he warned that thecountry does not need a political crisisand elections "with all present domesticand European economic problems."

Recent surveys show that the conser-vative opposition Slovenian DemocraticParty led by Janez Jansa, who alreadyserved as prime minister from 2004 until2008, is likely to win the elections.

Slovenia became the first, and so farthe only former Yugoslav republic to jointhe European Union, in 2004.

It joined NATO that same year and,in 2007, joined the EU's economic andmonetary union, adopting the euro as itscurrency and committing to the euro-zone's stability rules of low deficits andlimited debts.

SLOVENIAPOLITICS

The sale of bankrupt industrial com-pany A-Tec Industries AG (A-Tec)could be overruled by judges after adefeated bidder revealed plans to ap-peal the decision in court.

Czech-Slovakian investment com-pany Penta announced an affiliate hasasked the Commercial Court of Vi-enna for an injunction of the agree-ment between A-Tec and purchaserContor Industries Gmbh.

Penta argues Contor was estab-lished and officially registered forbusiness by Thomas Schätti, an ex-A-Tec employee and consultant only on25 June, 10 days after the deadline foroffers for the bankrupt company.Penta also accused Schätti of havingbreached rules for fair competitionsince he was in touch with them as

well as A-Tec and garnered confiden-tial information that way beforefounding Contor to place an offerhimself.

Penta and A-Tec engaged in war ofwords before. A-Tec chief Mirko Ko-vats, who may remain in charge de-spite the sale of the company toContor, claimed a few days before thetakeover this month that formermembers of KGB, the Soviet Union’snational security agency, foundedPenta. He also said the entrepreneursfailed to make clear where their assetsoriginated from.

Now Penta announced Contorbreached various insolvency proce-dure agreements. Contor has to pay €200 million to a trustee by 30 Sep-tember to fulfil the agreed 47% quote

for creditors of A-Tec which opted forcontrolled bankruptcy proceedingslast October.

However, judges at Vienna’s Com-mercial Court may declare the wholetakeover agreement null and void andorder a restart of the sale.

A-Tec is engaged in various indus-trial operations. It manufactures toolsand machinery, builds factories andoperates in the minerals and metalssector. Its financial difficultiesshocked shareholders and analystssince A-Tec achieved a turnover ofthree billion euro in 2009 when thefirm had 12,000 employees world-wide. A-Tec board members andmanagers could face embezzlementand accounting fraud charges over thedeal.

AUSTRIA BUSINESS

A-Tec sale hit by Penta lawsuit

More and more Austrians are buying second-hand cars.Statistik Austria announced 67,814 used cars were sold

last month, 1.8% more than in August 2010. The share ofdiesel-powered vehicles inched back by 0.5% to 54.4%.

The number of registrations of second-hand trucks im-proved by 1.9% from August 2010 to the same time of the

current year.Earlier this month, Statistik Austria said around 25,884

new cars were registered across the country in August, upby 4.8% compared to the same month of 2010. Ford didbest among Austrian’s 10 most popular brands with a77.3% increase of sales.

AUSTRIA AUTOMOTIVE

Used car sales on the rise

Slovenian Prime Minister Borut Pahor in parliament in Ljubljana, Slovenia, 20 Septemberafter his cabinet lost a confidence vote. |EPA | Matej Druznik

BELGIUM · NETHERLANDS · LUXEMBOURGNew Europe| Page 27

THE EUROPEAN UNIONSeptember 25 - October 1, 2011

Clearstream, the international central securities depository(ICSD) within Deutsche Börse Group, will appoint Stan-dard Chartered Bank as a new cash correspondent bank inHong Kong, for Hong Kong dollars and the Chinese Ren-minbi held outside mainland China.

Giles Elliott, Global Product Head, Securities Services ofStandard Chartered, said: “We are delighted with this ap-pointment by Clearstream. It highlights the significance ofour role as a leading HKD clearer and liquidity provider to theHong Kong market. Standard Chartered’s depth of servicesin Hong Kong was key to meeting Clearstream’s needs. Welook forward to a strong partnership.”

Mark Gem, Member of the Executive Board of

Clearstream and Head of Business Management, said: “Weare delighted to partner with Standard Chartered Bank inHong Kong. Standard Chartered has an extensive coverageand an in-depth understanding of the local market that willincrease access to liquidity and thus the settlement flexibilityon site.”

Clearstream has a long-standing presence in Asia: Thecompany opened its first office in the region in Hong Kongin 1990. Clearstream has also representative offices in Dubai(since 1995) and Tokyo (since 2007) and a branch in Singa-pore (since 2009) – the company’s operational hub for the re-gion. 20 percent of the Clearstream revenues is coming fromAsia.

Clearstream appoints partner in Hong KongLUXEMBOURG FINANCE

LUXEMBOURG | AID

Luxembourg to provide aid for West AfricaThe United Nations and Luxembourg signed an agreementto provide rapid response food aid and communicationsneeds to West Africa in response to a humanitarian crisis inthe region. Under the four-year agreement Luxembourg willprovide €30.8 million to support emergency response andother programmes such as school meals, nutrition activities,support to HIV/AIDS and tuberculosis, and emergencypreparedness. “This partnership is launched at a critical timein the world – economic and weather shocks continue tochallenge the food security of nearly 1 billion people onearth,” UN World Food Programme (WFP) Executive Di-rector Josette Sheeran said of the agreement signed by heragency. “Luxembourg’s support for humanitarian assistanceand international cooperation is second-to-none,” she added,noting that the grand duchy, with a population of some500,000, is WFP's largest per-capita donor, with more than€15 for every one of its citizens. Sheeran stressed that Lux-embourg’s commitment to sign multi-year partnershipagreements with WFP allows for forward planning and flex-ibility that ensure the most effective deployment of tools tofight hunger. It is also providing an in-kind donation by de-veloping an innovative platform to support telecommunica-tions in emergencies, allowing WFP, as head of thehumanitarian community’s Emergency Telecommunica-tions Cluster, to set up life-saving voice and data links dur-ing quick-onset disasters such as earthquakes and floods aswell as other operations around the world.

BELGIUM | BUSINESS

Bekaert inaugurates plant expansion in RussiaOn 15 September Bekaert, a Belgium-based steel cordprovider and a global technological leader, celebrated theopening of its plant extension in Lipetsk, Russia. The inau-guration event took place with the Chairman - Baron Buysse- and the members of the Board of Directors of Bekaert, theresponsible authorities of the Lipetsk Parliament and Spe-cial Economic Zone, and key customers and other businesspartners. Bekaert has been present with steel cord manu-facturing operations in Russia since the beginning of 2010and has built a growing customer base in the region. In viewof expected efficiency and flexibility gains, Bekaert decidedto extend its production platform in Lipetsk with a productsmanufacturing unit. The investment encompassed the con-struction of a new building covering 13 000 square meters,the installation of infrastructure and state-of-the-art ma-chinery, and the hiring and training of extra personnel. Theplant currently employs close to 200 employees and plansadditional recruitments in line with the growth.

NETHERLANDS | JOBS

Unemployment rises in AugustAccording to the latest figures released by Statistics Nether-lands, unemployment, adjusted for seasonal variation, grewby 8000 in August , reaching 421,000 or 5.4% of the labourforce. Figures published by the Institute for Implementationof Employees’ Insurances (UWV), indicate that the numberof unemployment (WW) benefits rose marginally in Au-gust, whereas the number of job seekers remained stable. Un-employment rose for the second month in a row. In August,421,000 people in the Netherlands were unemployed(25,000 more than the average over the first six months of2011) when unemployment ranged between 392,000 and400,000. The number of unemployed has risen notably inthe 25-45 age bracket. Over the first half of 2011, unem-ployment in this age category averaged 170,000, but thatnumber increased to 186,000 in August. Unemploymentgrowth among under-25s and over-45s was less substantial.

Knapen seeks to build confidence in euro

During his talks with the Italian For-eign Minister, Franco Frattini and otherItalian officials, Ben Knapen, the DutchMinister for European Affairs and In-ternational Cooperation, sought sup-port from the Italian government onmeasures to stabilise the euro and onthe new EU multi-annual budget.

Knapen urged his Italian colleaguesto support the measures needed to re-store confidence in the euro. Last week,the Dutch government presented pro-posals to improve the supervision of

member state's compliance with theEU budgetary rules.

“We need stricter rules and moreforceful supervision to ensure that theEU member states put their budgets inorder,” Knapen said. “Heads of state andgovernment leaders will discuss this atthe next European Council.”

Knapen said he hopes that the Italiangovernment will make good headwayin carrying out the measures. Italy’s sup-port is also needed in the negotiationson the EU multi-annual budget for

2014-2020.The Netherlands wants to modernise

the EU budget, through more innova-tion, stronger economic growth and abetter competitive position.

“European spending doesn’t needraising, as the European Commissionproposes, but improving. At a timewhen every member state has to makecuts, the EU also needs to economise,”said Knapen. ‘

He added, “The Italians agree withus on this.”

THE NETHERLANDS DIPLOMACY

The Netherlands pledges money to development“This will be the year of developmentpolicy modernisation,” said Dutch De-velopment Minister Ben Knapen abouthis 2012 budget. “Now that we’ve de-cided the amounts, the embassies in our15 partner countries can set to work onour new development policy priorities,”he said.

“We will be making joint, targeted

investments in developing countries ineconomic development, security, stabil-ity and the legal order,” said Knapensaid. In 2012 the government will alsoinvest €200 million in schemes to useDutch business and academic expertiseto foster economic growth, for exampleby enhancing food production in devel-oping countries.

The new priorities are water, food se-curity, security and the legal order, andsexual and reproductive health andrights (SRHR, with fightingHIV/AIDS as a major component).

The Dutch government will con-tinue working within the EU in 2012to promote more effective and efficientdevelopment cooperation.

THE NETHERLANDS DEVELOPMENT

Dutch State Secretary Ben Knapen chats with Polish State Secratary for Europe Nikolaj Dowgielewicz (right) prior to a European

General affairs council in Brussels, Belgium, 12 September 2011. |EPA | Olivier Hoslet

POLAND · HUNGARY · CZECH REPUBLIC Page 28 |New Europe THE EUROPEAN UNIONSeptember 25 - October 1, 2011

German rubber and plastics technology company is consid-ering building a €5 million rubber plant in the Hungariancity of Nyiregyhaza, managing director Hannes Friederich-sen said on 21 September, Budapest Business Journal re-ported.

A decision on the plant will be taken before the end of theyear, Friederichsen said. Between 20 and 25 people wouldwork at the plant which could start operating in October2012, he added.

The plant could be built at the base of ContiTech unitPhoenix Legrugo Technologia Gumiipari, said Phoenixmanaging director László Jókay. The unit, which makes airsuspensions for railway vehicles, has invested about € 9 mil-lion at the base in the past several years, he added. It employs230 people.

ContiTech employs 3,000 people in Hungary at plantsin Szeged and Mako, in the southeast, and in Vac, nearBudapest.

ContiTech to build rubber mix plant in NyíregyházaHUNGARYINDUSTRY

A Czech court has slapped a huge2.3 million Czech crowns fine onarms trader Omnipol over a 1998arms deal, local media reports re-vealed last week. The Czech armstrading company acts as conciliatorin government to government sales, alucrative business area which oftencomes under spotlight for unfairbusiness practices.

Omnipol deals in both defenseand aerospace equipments. This casewhich resulted in an embarrassingoutcome for the company was re-lated to a deal in which Omnipolsold defective anti-tank missiles tothe Czech defence ministry.

According to the reports appear-ing in Czech media, the court wasconvinced by the evidences and wit-nesses presented by and on behalf ofthe prosecution which proved that in1998 the company delivered out-of-date Russian-made Shturm missilesystems to the Czech Army.

The most noticeable part of theevent is that, the ruling was passeddown early this year but wasn’t high-lighted. It only came under spotlightrecently when judges began to han-dle the appeals process. In total, threelegal actions have been levelledagainst the company.

As reported, the Shturm contract,worth 70 million crowns, called foran initial delivery of 60 of the radio-guided anti-tank missiles and a sec-ond delivery of 20 more. Omnipol’scompetitors had reportedly warnedthat the arms dealer was planning ondelivering goods purchased fromdealers in Bulgaria that did not meetthe tender criterion of being lessthan two years old.

The facts found during the courseof the investigation that followed re-vealed that they had been producedmore than a decade earlier. Czechpolice who investigated said it wasthe Bulgarian traders, if anyone, whohad committed a fraud.

The website army-

technology.com informed that theanti-tank Shturm missile, which car-ries the Russian designation 9M114and is known by the NATO desig-nation AT-6 Spiral, is a 130mm cal-iber projectile with a range of400-5,000 meters.

It first entered service with theRussian Army, and was later deliv-ered to Armenia, Bulgaria, Czecho-slovakia, the Czech Republic,Georgia, Indonesia, Poland, Slovakiaand Ukraine. But the delivery ofmissiles now seems to be just the tipof an iceberg.

Some other reports revealed thatrecently, Spanish CASA transportaircraft purchased by the Czecharmed forces via Omnipol failedvarious safety tests and in Aprilthe Czech government demandedthat the arms dealer pay for fixingthem.

The Czech defence ministry evenhas warned that it would considercancelling the contract and returningthe planes. At issue is also the factthat the planes sold to Czech Re-public carried a price tag much above

what had been paid for the sameproduct by the Portuguese ministryof defence.

The contract for the purchase offour CASA C-295M was signed byformer defense minister VlastaParkanova under the Civic Demo-cratic (ODS) government headed byMirek Topolanek, on the day beforeshe was replaced as minister by Mar-tin Bartak who is now under investi-gation for having allegedly solicited abribe from former US ambassadorWilliam J Cabaniss.

The CASA planes were boughtwithout a public tender, which theEuropean Commission saysamounts to a breach of EU rules andhas initiated legal proceedings in theEuropean Court of Justice (ECJ).Meanwhile Czech Defence MinisterAlexandr Vondra recently initiatedan internal investigation.

Allegations of domestic corruptionand favoritism in the controversialCzech supersonic fighter tender(which eventually went to leaseGripens from Sweden) also centeredon Omnipol.

Czech firm Omnipol fined overanti-tank missiles sale

CZECH REPUBLIC ARMS HUNGARY|TELECOMS

New mobile virtual network launchedThe Hungarian units of the UK's Vodafone and Tesco on21 September announced the establishment of a joint ven-ture called Tesco Mobile, Budapest Business Journal re-ported. Tesco Mobile will be a mobile virtual networkoperator, paying to use Vodafone's network to offer mobiletelephone and internet services to subscribers. The 50-50JV is expected to launch services in the first half of 2012,said Vodafone Magyarország chairman-CEO GyörgyBeck and Tesco Global Aruhazak CEO Gerry Gray.Tesco Mobile numbers will have a new prefix, Beck said,answering a question. The number will depend on themarket regulator, he added. Gray said it was hoped TescoMobile would increase the number of Tesco Club cardholders and bring more people to Tesco stores. There are1.3 million Tesco Club card holders and about 3.5 millionshoppers visit Tesco store in Hungary a week. Tesco Clubcard holders account for about 60% of the stores' turnover,but there is room for growth as the proportion is higher inmany other countries, Gray said. Beck called the TescoClub card Tesco Mobile's "secret weapon". Vodafone willcomplete a network development in the summer of 2012resulting in 99% voice and broadband mobile internet cov-erage, Beck said.

POLAND|FINANCE

EIB support smaller projectspromoted by SMEsThe European Investment Bank (EIB) is lending €150million to Europejski Fundusz Leasingowy (EFL) to fi-nance projects in the areas of industry and services, in-cluding energy, environmental protection, health andeducation as well as investments supporting the devel-opment of the knowledge economy in Poland. SMEsand mid-cap companies will be the final beneficiaries ofthis EIB loan. This loan is in line with the EIB’s prior-ity of strengthening its support for Europe’s SMEs andmid-caps to help improve their access to long-term fi-nance. To this end, the EIB is joining forces with well es-tablished financing institutions, like EFL, that know thelocal market and have well developed network ofbranches with SMEs and mid-cap companies as theircustomers. EFL is the leading leasing company inPoland, with an established franchise and strong brandrecognition. EFL was founded in 1991 and has beenpart of the French Crédit Agricole S.A group since2001. Building on the first two operations with EFL,this new loan allows EFL and EIB to continue theirsuccessful cooperation. Under this intermediated loanEFL will benefit from the SME Finance Facility, a spe-cial scheme supported by European Commission grants.

CZECH REPUBLIC| BUSINESS

Tesco acquires Forum LiberecTesco recently bought the 50% stake held by Multi

Development in the Forum Liberec shopping centrein the Czech Republic, local media reports revealedlast week. Tesco Stores CR and Tesco Holdings,which already owned 50% of Forum Liberec shoppingcentre, would buy the remaining half share in thescheme for an undisclosed sum, the reports said. Thescheme, which is located in the centre of Liberec, inthe north of the Czech Republic, comprises 484,000sq ft of retail, 32,000 sq ft of offices and 14 apart-ments. Multi Development was responsible for thedesign and development of the centre and will con-tinue to operate Forum Liberec through its manage-ment company Multi Mall Management.

Farewell to arms, a sculpture by Czech artist, David Cerny is seen on the boat at Vltava river

in Prague.| EPA/MATEJ DIVIZNA

SWEDEN · DENMARK · FINLANDTHE EUROPEAN UNION

New Europe | Page 29


Court to consider Swedish carmaker Saab appealAiling Swedish carmaker Saab cleared a legal hurdle on 19

September when a court granted permission to consider an ap-peal by the group, dpa reported.

"Saab Automobile is pleased with the (appeal) court's deci-sion and will now await further developments," the carmakerand its Dutch-based owner Swedish Automobile said in astatement.

Production at Saab's main plant in Trollhattan, westernSweden, has been at a virtual standstill since April and wagepayments have been late for three months in a row, prompt-ing unions and several suppliers to launch bankruptcy pro-ceedings. Two white-collar unions previous week filedbankruptcy petitions over unpaid wages in order not to missout on a wage guarantee. The metal workers' union said itwould file its petition on 20 September unless the appeal courthad granted Saab permission to reorganise its business.

In recent days, Stefan Lofven, head of the national metalworker's union has discussed Saab's prospects with executivesof Chinese groups Youngman and Pang Da that plan to investin the troubled group.

"We have adopted a two-track approach," Lofven said of thedecision to try to secure Saab's future and union members'wages.

The unions at Saab have in recent weeks collected powers ofattorney from members as part of efforts to pressure the com-pany to pay wages. In addition to unions, four suppliers havealso filed bankruptcy petitions over unpaid bills, the Vaners-borg district court said Friday.

The Vanersborg district court said it would hold a hear-ing with Saab's creditors on 26 September. The hearingcould be cancelled should Saab and the creditors settle inthe meantime.

AUTOSSWEDEN

Finland's Neste Oil said in a statementon 20 September it had started theworld's largest renewable fuel facility inRotterdam in the Netherlands, Newsroom Finland reported.

"The start-up is a significant mile-stone in Neste Oil's cleaner traffic strat-

egy and consolidates the company's po-sition as the world's leading producer ofrenewable diesel," the statement added.

With an output of some 800,000tonnes a year and a workforce of about150 people, the refinery can use mostkinds of vegetable oils and waste fats as

feedstock.The government-controlled com-

pany said the Rotterdam refinery wouldraise Neste's total biodiesel output toabout two million tonnes a year, withone refinery in Singapore and two inPorvoo in Finland.

Finland's Neste fires up Europe's largest biodiesel refinery

FINLAND

ENERGY

The European Commission has con-cluded that a law liberalising gam-bling in Denmark - and at the sametime creating lower taxes for onlinecasinos as compared with land-basedones - is in line with EU state-aidrules. The Commission had openedan investigation last year, assessingwhether the different tax treatmententailed an unjustified competitiveadvantage to online casinos.Denmark adopted a law in 2010 liberal-ising gambling, which up to now is astate monopoly. The entry into force ofthe law was postponed while awaiting

clearance from the Commission understate-aid rules.The Danish Gaming Duties Act fore-sees that online providers of casinogames and gaming machines will besubject to a duty of 20% on the grossgaming revenue compared with up to75% for land-based casinos and gaminghalls.In assessing the law's compatibility withArticle 107(3)(c) of the Treaty on theFunctioning of the EU, the Commis-sion took into account the availability ofsometimes illegal online offers byproviders established in other countries

or subject to low or even no taxation,going against the purpose of liberalisa-tion of the market. The Commissionnoted the law's other objectives of pro-tecting the young and the vulnerablefrom becoming addicted to gamblingwhile making it a legal activity. The Commission's decision establishedthat the lower rate of taxation for onlinegambling indeed constituted state aidbut finds it compatible with EU rules,because the positive effects of the liber-alisation of the market outweigh the dis-tortions of competition brought aboutby the measure.

Commission approves Dane’s online gamblingPOLITICS

DENMARK

SWEDEN|PHARMA

Pact signed to develop medicineSelcia, a UK based contract research firm, has enteredinto a research pact with Sweden-based NeuroVivePharmaceutical to develop new drugs compounds andmedicines for mitochondrial physiology and patho-physiology, Market Watch reported on 19 September.Under the agreement, both the parties have invested forcombining Selcia's medicinal and analytical chemistry,with NeuroVive's research and development programsin mitochondrial medicine. NeuroVive CEO MikaelBronnegard said in this collaboration with Selcia, Neu-roVive will target the development of new drugs for dis-eases like stroke, heart attack, obesity, and cancer - alllarge potential markets with significant burden of dis-ease. "This will add new drug entities to NeuroVive'sbroad development pipeline and will enable the com-pany to capitalize on the commercial opportunities de-riving from our expertise in mitochondrial research,including our cyclophilin-D program," Bronnegardsaid. NeuroVive CSO Eskil Elmer said this collabora-tion with Selcia will allow them to accelerate the dis-covery and development of new mitochondrialmedicines and drug-like compounds within the scope oftheir current R&D budget in the discovery phase. Sel-cia Limited is a leading worldwide provider of contractresearch services in integrated drug discovery, fragmentscreening, medicinal chemistry and GMP certified 14-C custom radio-labelling services. Selcia operates from2,800 sqm modern facilities with a GLP analytical lab-oratory, in Ongar, Essex, United Kingdom and Hop-kinton, MA, USA. NeuroVive Pharmaceutical AB is aSwedish drug development company whose primarymission is to develop drugs for the treatment of acutebrain injury, reperfusion injury in myocardial infarctionand other acute injuries where mitochondrial energyproduction is critical for clinical outcome.

FINLAND|DEFENCE

Finnish military bins home guard plansThe Finnish military, facing government pressure to cutspending, has abandoned plans to found a home guard,General Ari Puheloinen, the commander of the DefenceForces, said on 19 September, News room Finland re-ported. Gen Puheloinen added that founding a homeguard would be in contradiction with the current cost cuttargets. The general went on to say that some bases wouldbe closed from 2013, with all county commands done awaywith. Stefan Wallin, defence minister, said at the openingof the national defence course that civilian as well as mili-tary job cuts could not be avoided. Previous rounds of mil-itary spending cuts have focused on civilian personnel,leaving the number of professional soldiers unchanged.

SWEDEN|RETAIL

Systembolaget mulls home delivery serviceSweden's state-run alcohol retail monopoly Systembolagetis considering plans to expand its current e-commerce toinclude a home delivery service, The Local reported on 19September. "We can maybe get going next year," said Sys-tembolaget head Magdalena Gerger. Gerger said that thestate-owned firm is prepared to consider opening a homedelivery service for customers at a cost of around 100Swedish crowns ($15). Gerger described the move as amajor decision, in comparison to the extension of openinghours to include Saturdays. "We have to adapt to the real-ity that people live in," she said.

Virtual chips are on the menu for Denmark’s gamblers.| EPA/YM YIK

LATVIA · LITHUANIA · ESTONIA · SLOVAKIAPage 30 | New Europe THE EUROPEAN UNIONSeptember 25 - October 1, 2011

SLOVAKIA|BANKINGCabinet approves special bank levyOn 21 September, the Slovak Cabinet approved a draftlegislation that would see the Commercial banks oper-ating in the country paying a special levy based on 0.2%of a certain part of their liabilities to a special state fi-nancial assets account, local media reports revealed. Thefinance ministry expects that the bank levy would costthe banking organisations about 8% of their profits be-fore tax and would bring the state, an additional revenueof around €50 million each year. The cabinet said thedraft was designed to create mechanisms that will coverthe cost of financial crises and stimulate banks into re-ducing systemic risk, thus protecting the stability of Slo-vakia's banking sector. The basis for calculating the 0.2percent levy will be a bank’s liabilities minus its equityand the amount of deposits it has under Slovakia’s de-posit protection system. "Banking entities should neitherpay deductions (the levy) from their own capital re-sources, as increasing them is a long-term goal in linewith the Basel recommendations aimed at combatingthe crisis, nor from their customers' deposits, from whichbanking entities are already deducting contributions forthe Deposit Protection Fund," A finance ministry state-ment reportedly said. According to provisional data pro-vided by the Slovakia’s central bank, the total amount ofbank liabilities that would form the basis for calculatingthe levy was €25.5 billion at the end of 2010.

SLOVAKIA|LABORMinistry announces projects to fight unemploymentFour new projects could help address long-term un-employment, including that among Roma citizens, saidLucia Nicholsonova, State Secretary of the Ministry ofLabour, Social Affairs and the Family and MiroslavPollak, the Government Proxy for Roma Communi-ties, at a joint press conference on 22 September, Slo-vak spectator reported. With a total cost of €93.3million, much of which will be financed from the Eu-ropean Social Fund (ESF), the projects are expected tobe launched in 2012. The first project is planned to lastfor four years and is aimed specifically at residents ofRoma settlements. Social workers in the settlementswill be assisting people in these communities in situa-tions involving communicating with local authoritiesor visiting a doctor. The second project concerns com-munity centres and will finance the salaries of socialworkers, community workers, assistant teachers andhealth-care workers involved in the first project. Thethird project involves so-called social enterprises, whichin some places have proven useful in tackling long-termunemployment and employment of people with lowqualifications. The last project targets marginalisedgroups of people, who after successfully passing a coursewill qualify to work as caregivers.

SLOVAKIA|INVESTMENTSARIO seeks to find new investors in GermanyThe Slovak Investment and Trade Development Agency(SARIO) will represent Slovakia in Germany where itwill attend a series of investment seminars and individ-ual meetings, with the aim of attracting new investors toSlovakia, Slovak spectator reported on 19 September.“We would like to present Slovakia as a country suitablenot only for industrial production but also for invest-ments in research and development,” SARIO headRobert Simoncic said.

The Emir of Qatar, Hamad bin Khalifa AlThani, recently expressed his country’s interestin increasing their participation in the Latvianmarket. An offer on opening of such new chan-nels of investments was expectedly greeted byLatvian President Andris Berzins. The two lead-ers were having talks while both were in US lastweek.

Citing officials of both sides local reports saidthe Latvian president and the Qatari emir agreedon principle on creating an intergovernmentalcommission in this field. The purpose ofHamad's suggested commission would be to dis-cuss the possible mutually beneficial cooperationmodels and specify the economy sectors ofLatvia in which Qatar could invest, the reportsread. Berzins, reportedly, fully supported thisproposal and pledged Latvia's cooperation in thisregard. During their meeting, Berzins briefed theQatari leader on the political and economic sit-uation of Latvia, highlighting the country's abil-ity to successfully overcome the financial crisisand the necessity of ensuring economic develop-ment, which is one of the reasons why foreigninvestment needs to be attracted by Latvia.

Currently there is no economic cooperationbetween Latvia and Qatar. Qatar's investmentsmostly go into real estate, banking and chemicalindustry. Qatar's largest investments in Europeare in Volkswagen, Barclays, Lagardere andSainsbury's.

Qatar eyes Latvian marketLATVIA INVESTMENT

Estonia is eyeing to reroute its NorthAmerican businesses through Halifax asit is expected to provide the perfect gate-way for the Baltic nation into the conti-nent. The interest was spurred during arecent visit of an Estonian delegation tothe area comprising of transportationrepresentatives.

According to local reports, they werein Nova Scotia to talk about Halifax asthe primary gateway option to NorthAmerica. While addressing the press, theEstonian delegation reportedly statedthat moving goods and people throughHalifax would be the most competitivetrans-Atlantic route for the country toand from North America.

Officials said the two-day delegation

resulted in a Trans-Atlantic partner-ship focused on increasing opportuni-ties between these two regions. "It's ourgoal to show Estonians that Halifax isa competitive option when consideringa North American entry or exit. We'recompetitive on price, time and reliabil-ity when it comes to reaching mid-west inland markets and populations,"Joyce Carter, chair of the Halifax Gate-way Council, was quoted as havingsaid. "It's also important to introducethem to the team here in Halifax thatrepresents an inter-modal approach totransportation. That's why CN, Ceres,Halterm, Halifax Port Authority, NovaScotia Gateway Secretariat, HalifaxStanfield International Airport and

ACOA are all at the table today," theofficial added.

Estonia also acts as an important gate-way providing access to a consumer mar-ket of approximately 300 million, one ofwhich is the Russian market, through thePort of Tallinn and Estonian Railways.Similarly, Halifax provides cargo ownersand 3PLs direct access to Ontario,Chicago and the American mid-westmarket. This is not a new approach forEstonians. Transportation and logisticsorganisations have been investigating theNorth-American freight market since2009," officials said in a release. "Thisdelegation is the final step in formalisinga strategic partnership," the documentadded.

ESTONIABUSINESS

Estonia eyes Halifax as North American gateway

US President Barack Obama recently reiterated his country’ssupport to the Baltic nation’s aspiration to gain an independ-ent footing in the energy sector. During the inauguration of aninternational initiative on open government partnership, theUS premier reassured Lithuania that his government wouldcontinue offering its support to Lithuanian energy sector. Frompart of the Lithuanian government, Foreign Minister Audro-nius Azubalis thanked Obama for his support to Lithuania'sprojects that aim at increasing the country's energy independ-

ence. Describing the scopes of the open government partner-ship, the Lithuanian officials explained it as a multilateral ini-tiative which would ensure efficient work of governments,based on transparency, citizens' involvement in governance,strengthening fight against corruption and use of modern tech-nologies in governance. Lithuania was invited to join the ini-tiative to share its experience and best practice with othercountries that find the issues of governances and improvementof administrative skills very topical to them.

US supports Lithuania's energy diversificationLITHUANIAENERGY

The Emir of Qatar, Hamad bin Khalifa Al Thani, has expressed his country’s interest ininvesting in Latvia.|EPA/JUSTIN LANE

GREECE · CYPRUSNew Europe | Page 31THE EUROPEAN UNION


On 21 September, the Greek govern-ment announced new austerity meas-ures which include the immediateredundancies of thousands of civil ser-vants and new pension cuts, in orderto secure crucial bailout funds neededto avoid bankruptcy. Governmentspokesperson Elias Mossialos said thenew measures include increasing thenumber of civil servants to be sus-pended on partial pay to 30,000 thisyear from 20,000. "These decisions aremeant as a message to our partnersand the markets that Greece wants toand is capable of fulfilling its commit-ments and remain at the core of theeurozone and the EU," Mossialos saidin a statement.

Monthly pensions above €1,200 willbe subject to new cuts as will the pen-sions of people below the age of 55,Mossialos announced following a cab-inet meeting. The government alsodropped the tax-free limit on annualincome to €5,000 from 8,000.

The measures, the latest of a seriesof budget cuts, followed a lengthyCabinet session requested by GreekFinance Minister Evangelos Venizelosto brief his peers on the outcome ofnegotiations on 19-20 September withinternational debt inspectors.

They will return to Greece thisweek to resume a review of the auster-ity programme. The resumption of thereview is an important step toward se-curing the next instalment of bailoutfunds worth €8 billion that is neededto keep the country from bankruptcy.The instalment had been expected inSeptember, but international creditors

said a decision on whether to releasethe funds will not be made until earlyOctober.

Delayed reforms, stalled privatisa-tions and gaping budget issues, forcedthe troika of inspectors to suspendtalks in Athens in September. Theyvowed to return only if Greece madegood on promises to bring its budgetback in line and pursue a credible fis-cal strategy that would shrink thedeficit to 6.5% of gross domestic prod-uct by 2012.

Public transport was disruptedacross Greece on 22 September, afterworkers began a 24-strike as part ofprotests against austerity measures.Classrooms were empty as secondaryschool teachers, protesting cutbacks,joined the strike, and primary schoolteachers held rolling work stoppages.Finance Ministry staff has called a 48-hour strike for 27-28 September toprotest fresh wage cuts. They will bejoined by tax collectors and customsofficials. The two main labour unions- the civil servants' union ADEDYand the General Confederation ofGreek Labour - called two 24-hournationwide strikes for 5 October 5 and19 October to protest the govern-ment's austerity drive.

Meanwhile, Greek Prime MinisterGeorge Papandreou is expected inBerlin on 27 September for a meetingwith German Chancellor AngelaMerkel. Topics would include Greece'sefforts to get its budget under controland implement economic reforms,spokesman Steffen Seibert was quotedas saying by the press in Berlin. Seib-

ert said the German governmentwould wait for the experts' conclusionsbefore making further decisions con-cerning Greece. The German parlia-ment is due to vote on a second bailoutpackage for Greece in the comingweeks. Germany is the biggest con-tributor to the EU's bailout fund forGreece.

Without the aid Greece will defaulton its debt within weeks, possibly trig-gering a domino effect throughout therest of Europe. As pressure continuesto mount on Greece from its interna-tional creditors for quicker budgetcuts, Greece may consider holding areferendum on the county's member-ship in the eurozone, Greek dailyKathimerini newspaper reported. Itsaid Papandreou is considering callingthe vote on whether Greece shouldcontinue to tackle its debt crisis withinthe eurozone or by exiting the singlecurrency.

The report said that Papandreouhopes that the outcome of such a votewould constitute a fresh mandate forhis Socialist PASOK government tocontinue with an austerity drive over-seen by Greece's international lenders,the European Union, the InternationalMonetary Fund (IMF) and EuropeanCentral Bank.

A bill to be submitted in parlia-ment, paving the way for a referen-dum, is to be discussed in the comingdays, the newspaper added. During anemergency cabinet meeting on 18September, several ministers calledfor drastic action, which also includesearly elections.

GREECEECONOMY CYPRUS|ENERGY

Cyprus says Noble Energy has begun explorationsOn 20 September, Cypriot authorities said a US-basedenergy firm began exploratory drilling for oil and gasoff the coast of the eastern Mediterranean island de-spite warnings from Turkey. Deutsche Presse-Agentur(dpa) quoted an official from the energy sector of theTrade Department as saying that Houston-basedNoble Energy began drilling Sunday night (18 Sep-tember) on the southern coast of Cyprus. "The Re-public of Cyprus maintains its sovereign rights in itscontinental shelf in accordance with international lawand no agreement or decision by Turkey will affectthese rights," the Cypriot foreign ministry said in astatement on its website. "The Turkish announcementis yet another provocative act which is contrary to in-ternational law." On 19 September, Turkey’s EnergyMinistry said that will sign a seabed border agreementwith the Turkish Republic of North Cyprus (TRNC)ahead of oil and gas prospecting in Cypriot waters bythe Turkish state oil company.

CYPRUS|DIVIDED ISLANDUN calls for more efforts to increase convergencesDuring his meeting the Cypriot President DemetrisChristofias on 19 September, UN Secretary-General BanKi-moon encouraged him to continue the efforts to in-crease convergences on all chapters under negotiation andreiterated his expectation that the sides will move theprocess forward during the current intensified phase ofdiscussions, prior to his next meeting with both leaders atthe end of October. Replying to a question from pressafter his meeting UN Secretary General, Christofias said:“We are troubled, but there is time until October, and wehope that some will change their stance and we will reachmore convergences; because the convergences so far areon issues of secondary importance and we have diver-gences from the convergences we achieved previously,which are very serious. Consequently, we reserve until Oc-tober. There will be several more meetings in the frame-work of the extensive talks, in the hope that somethingwill change in Turkey’s behaviour.” Asked about the po-sition of the UN Secretary-General during their meet-ing, Christofias said: “Certainly, the UNSecretary-General indicated his interest to intervene, as Istated before. And by saying to intervene, we do not onlyrefer to the threats of Turkey but to the correction of be-haviours, if possible. We will see in time.”

CYPRUS|LOANRussia, Cyprus close to loan agreementMoscow and Nicosia are close to signing an agreementon a Russian loan to Cyprus, Russian Finance Minis-ter Alexei Kudrin said on 19 September, RIA Novostireported. Cyprus state debt hiked and economicgrowth slowed down amid the debt crisis in neigh-bouring Greece. It was earlier announced that Cyprusis in talks about a loan of €2-2.5 billion with a five-yearmaturity and an annual interest rate of 4.5%. "We havealmost reached (an agreement)... We are now con-ducting formal procedures," Kudrin said, without spec-ifying the sum of the loan. Cyprus Finance MinisterKikis Kazamias earlier said the country's authoritieshave no plans to seek aid from the European Union.Fitch Ratings cut Cyprus's sovereign rating to A- fromAA- in late May, saying it was concerned at the highlevel of exposure its banks had to Greek debt.

A woman walks past the closed doors of a metro station in Athens, Greece, 22 September 2011. Reports state that traffic was slowed for hours in the Greek capital asa 24 hours strike called by public transport workers to protest the government's austerity plan forced people to their cars and bicycles. |EPA/PANTELIS SAITAS

Citizens hit with new austerity cuts

BULGARIA · ROMANIAPage 32 | New Europe THE EUROPEAN UNIONSeptember 25 - October 1, 2011

IKEA opens in Bulgaria

IKEA, the world's biggest home-fur-nishing retailer, opened its first store inBulgaria's capital Sofia on 20 Septem-ber, eyeing a 10% market share in its firstyear of operation, officials said.

IKEA Bulgaria is a franchise of theGreek Fourlis company, which also hasthe IKEA rights for Greece and Cyprus.It plans to open in the coming years asecond store in the Black Sea city of

Varna. The Sofia store size is 30,000square metres and the overall investmentreached approximately €60 million.

The opening ceremony was held bythe Vice president of the BulgarianGovernment and Finance Minister.Among other important members ofthe local political and business commu-nity, present were the ambassadors ofSweden, Greece and Cyprus in Bulgaria.

But the store opened amid bad pub-licity over the allegedly steep prices setfor the Balkan country, an issue whichhas stirred outrage in social networks.The company has vehemently refutedthe allegations, saying that it is not fair tocompare the prices of specific IKEAproducts in various European marketsby not accounting for all parameters ofthe products in question.

BULGARIARETAIL

Restaurants chain KFC has opened inBucharest the first outlet with a dedi-cated coffee shop space, Business Re-view reported on 21 September.Located in the Dorobanti area of thecapital city, the new location has a 374square metre surface, out of which 40square metres are for the coffee shoparea. The total investment for openingthe new venue was of €600,000. “KFC

Dorobanti is a trial project for us, sinceit has a coffee shop area incorporatedin the store.

The new Coffee & Sweets conceptfits it very well. The suggestion to havea coffee shop, especially in restaurantsclose to areas with many offices or withtradition of spending the time in coffeeshop, belonged to our clients in Roma-nia, this being a 100% local test,” said

Carmen Lupulet, marketing directorwith KFC Romania. The estimatedturnover for the first operating year ofKFC Dorobanti is of €1.5 million. TheKFC network is operated in Romaniaunder a franchise system by US FoodNetwork. KFC Dorobanti is the 41outlet in Romania, the seven streetrestaurants in Bucharest and the 16 inthe country.

KFC opens Bucharest outlet with coffee shopROMANIADINING

Bulgaria ranked 28th in terms of economic freedom globally,according to the annual report of Canada's public policy think-tank Fraser Institute, presented in Sofia by the Institute forMarket Economics (IME). Despite the improvement, Bul-garia still lags behind in areas related to the functioning of itsjudicial system and protection of private property, where it iseven losing ground. The report is based on developments seenin 2009, the most recent year for which data was available forall 141 countries covered by the Fraser Institute report.

Bulgaria has slightly improved its performance mainly be-cause of indicators related to inflation. This is because in 2009,when the economy tanked after more than a decade of growth,inflation was between 2% and 3%, compared to 10% in 2008,the last of the boom years.

Meanwhile, the International Monetary Fund (IMF) has

revised down its forecast for Bulgaria's economic growth in2011 to 2.5% from 3% predicted earlier, in view of the expectedglobal economic slowdown. The IMF also lowered its 2012growth outlook for Bulgaria to 3% from its previous guidanceof 3.5%, according to the institution's latest report. Bulgaria isalso forecast to record inflation of 3.8% this year against 4.5%expected earlier.

The IMF forecast downgrade comes almost two monthsafter in August the European bank for Reconstruction andDevelopment (EBRD) lowered its 2011 economic growthforecast for Bulgaria from 3.1% to 2.3%.

In the spring of 2011, Bulgaria's Finance Ministry reducedits economic growth forecasts for 2012 and 2013 in light ofthe civil unrest in the Arab world and the aftermath of thedevastating earthquake that hit Japan on 11 March.

Bulgaria moves up in global economic freedomBULGARIAECONOMY

BULGARIA|INTERNET

Bulgaria ranks 3rd in global internet speedBulgaria has been placed third among the world's top Inter-net download speeds with its 1,611 KBps average, accordingto a study released by Pando Networks on 20 September.The list is topped by South Korea (2,202 KBps), followed byBulgaria's neighbour, Romania (1, 909 Kbps). AlthoughBulgaria routinely scores low in European Union broadbandusage reports, that is because such studies do not includehigh-speed local-area network (LAN) solutions, which arethe main source of high-speed internet in the country.

ROMANIA|RETAIL

Carrefour Romania opens its 38th supermarketCarrefour Romania has opened a new supermarket in Vol-untari on the Pipera Blvd. This brings the French retailer’slocal network to 38 supermarkets, Business Review reportedon 21 September. The new unit has a sales area of 460 squaremetres and sells about 5,000 products. Over 20% of the su-permarket’s offer is made of Carrefour’s private label prod-ucts. In addition to the supermarket network, Carrefour alsoruns 23 hypermarkets on the local market.

ROMANIA|MEDIA

Purple Mind Productions launches in RomaniaPurple Mind Productions, an independent TV produc-tion company of documentaries and journalistic contentofficially launched on 20 September on the Romanianmarket, Business Review reported. The company targetsmainly the international media market and is the only TVproduction company that can deliver products in 11 lan-guages. The company has a network of correspondents in12 countries- Great Britain, The United States, China,Palestine, Greece, Ukraine, Georgia, Turkey, Venezuela,Indonesia, Bangladesh and India. “We founded PurpleMind Productions to facilitate the access of internationalmedia to a variety of subjects of global interest in the coun-tries where we are represented. Currently our team is madeup of 31 journalists who are united by a single passion: in-dependent journalism,” said Liliana Ciobanu, founder andexecutive manager of the company.

ROMANIA|TOURISM

Eurolines agencies rebrand as TUIRomanian group Eurolines that runs a network of 52 agen-cies has struck a deal on 20 September with German com-pany TUI Travel Plc whereby 25 of the agencies of theRomanian operator will be rebranded as TUI Travel Center,Romania Insider reported. In a first stage, 25 out of Euro-lines’ 52 agencies will be rebranded as TUI Travel Centerand the plans are for the network to reach 100 agencieswithin the next three years. The first re-branded agency islocated on the Nicolae Balcescu boulevard in Bucharest. Theagencies will sell the TUI products under the concept ofTravel Hypermarket. Thus, the agencies TUI Travel Centrevia Eurolines will offer complete vacation packages as well asindividual products such as accommodation, holidays in Ro-mania and abroad, plane, coach and train tickets, travel in-surances, transfers, coach and minibus rentals, as well as therent-a-car service. The network hopes to have around 4,000foreign tourists coming to Romania next year, while a min-imum of 6,000 Romanians are expected to use the network’sservices to reach foreign destinations. The Eurolines agencieswill close this year with € 28-29 million sales.

A staff member walks in front of a podium with text “Welcome” during the official opening ceremony of an IKEA store in Sofia, Bulgaria, 20September 2011. |EPA/VASSIL DONEV

NORWAY · ICELAND · SWITZERLANDNew Europe | Page 33PARTNERS


Hydro balks at bauxiteNorsk Hydro ASA has signed an agreement to divest its 35%interest in the Jamaican bauxite and alumina partnership Alu-mina Partners of Jamaica (Alpart) to UC Rusal for a cash con-sideration of 250 million Norwegian crowns ($46 million),Norway Post reported on 19 September .

"Hydro acquired Vale's bauxite and alumina operations inBrazil earlier this year, including the word's largest alumina re-finery and high-quality bauxite resources, considerablystrengthening Hydro' position in the aluminium value chain.Following the acquisition, the 35% interest in Alpart is lessstrategic for Hydro," said Executive Vice President Johnny Un-deli, responsible for the Bauxite & Alumina business area inHydro.

The transaction is expected to be completed in October2011, and a positive after-tax impact of about 400 millioncrowns is expected to be recognized in Hydro's Q3 2011results.

The operations in the bauxite mines and the alumina refin-ery in Jamaica were curtailed in 2009 due to over-capacity inthe alumina market. The plant is still curtailed.

Following the divestment of Alpart, Hydro will have 60% inthe Paragominas bauxite mine with annual capacity of 9.9 mil-lion tonnes, increasing to 100% ownership in 2015. A plannedexpansion to supply the CAP alumina refinery will increaseParagominas' capacity to 15 million tonnes.

Hydro will also have five per cent in the MRN bauxite minewith annual capacity of 18 million tonnes, and volume off-takeagreements for Vale's 40% ownership interest in the mine and91% in the Alunorte alumina refinery with annual capacity of6.3 million tonnes.

In addition, Hydro has an alumina supply agreement in Aus-tralia with Rio Tinto lasting until 2030 for 0.5 million tonnes.The agreement allows for volume increases at different stagesduring the duration of the contract.

NORWAYMINING

Haarde of hearingFormer Iceland prime minister GeirHaarde on Monday said a trial over hisalleged breach of duty in connectionwith the collapse of the country's bank-ing sector three years ago should not goahead, dpa reports.

Haarde and his attorney made the callat the parliament-appointed specialcourt. The trial is a first in the history ofthe Atlantic island nation.

Parliament last year decided thatHaarde, 60, should face trial over his fail-ure to avert the collapse. If convicted, hefaces a two-year jail term.

Attorney Andri Arnason argued thatthe case be dropped, since the prosecu-tion had not explained what Haarde"could have done to prevent danger, oreven what the danger was in the firstplace."

Arnason also claimed that his clienthad been denied access to case files.

Prosecutor Sigridur Fridjonsdottir saidthat the former premier had not acted onadvice and dismissed calls that the casebe dropped.

A higher court was now to considerwhether the case should proceed or not.

Haarde has argued that the case is po-litically motivated since parliament a yearago voted not to charge three other for-mer ministers over their role in the col-lapse. Iceland and its 320,000 inhabitantswere hit especially hard by the financialcrisis, which led the country's three lead-ing banks to collapse simultaneously inthe autumn of 2008.

Haarde, former leader of the conser-vative Independence Party, resigned inJanuary 2009 after popular protests. Thecollapse of the financial system left thecountry with a gigantic debt burden.

ICELANDBANKING

Icelandic bank Landsbanki reportedprofits of $ 210 million (€ 152 mil-lion) after taxes in the first two quar-ters of this year. It is a 160%year-on-year increase, Iceland Reviewreported on 16 September.

The bank’s director Steinthor Pals-son said the profits can largely be ex-plained by currency exchange profitsfrom capital stock and the sale of as-sets. “We are hopeful that we are nowon the right track,” he added.

However, a loss in capital stock ispredicted in Q3.

The value of the bank’s loans de-clined because of its resources regard-ing debt problems facing householdsand companies following the bankingcollapse in 2008.

Landsbanki’s equity is now $1.8billion (€1.3 billion), compared to$1.4 billion (€1 billion) at the sametime last year. The equity ratio is22.4%.

Palsson said the profits from thebank’s core operations are satisfactory.“It is important that the operations of

Landsbanki are successful so that thetasks that lie ahead can be worked onin a difficult environment, such as therestoration of the Icelandic employ-ment market,” he said.

According to visir.is, Landsbankiearned more in the first six months of2011 than the other two large banks,Islandsbanki and Arion Bank, com-

bined.Arion Bank (formerly Kaupthing)

reported $86 million (€62 million) inprofits in the first two quarters of2011, and Islandsbanki (formerlyGlitnir) $70 million (€50 million).

In spite of the profits, 57 employ-ees were laid off at Arion Bank previ-ous week.

Landsbanki: Back in blackICELANDBANKING SWITZERLAND|BANKING

UBS stops all advertisingA report said bank UBS has put an indefinite stop to alladvertising in the wake of previous week’s revelation thata rogue trader lost more than $2 billion, Swiss Info re-ported on 19 September. According to the Swiss medianews website, Klein Report, the decision was taken due tothe negative publicity. Peter Hartmeier, head of corpo-rate communications at UBS Switzerland, told KleinReport that advertising the company’s services “basedon trust and expertise” made no sense before all the factsinto the case had come to light. Hartmeier told the web-site that UBS had no plans at the moment to launch apublicity campaign to improve its image in face of thedebacle.

NORWAY|SHIPPINGAker Seafoods renews trawler fleetAker Seafoods has concluded an agreement withSTX OSV AS to build three modern trawlers. Thetrawlers will have a new hull shape, reduced fuelconsumption and an increased catch capacity, Nor-way Post reported on 20 September. Aker Seafoodssaid it is taking an important step in the directiontowards a more environmental-friendly and prof-itable white fish catch. The investment in threemodern trawlers gives Aker Seafoods a considerableupgrade. Up to 30 new workplaces is createdthrough the increase of Aker Seafoods total catchcapacity and improved quota utilization. In additionthe entire fish will be utilized, said Thomas Farstad,CEO, Aker Seafoods. The trawlers will be config-ured as freeze trawlers with the possibility to deliverfresh fish for processing ashore. A separate fishmealplant will ensure utilisation of all rest raw-materialinto fishmeal. The trawlers are designed to catchwhite fish (cod/saithe/haddock), but may also beused for shrimp trawling. The planned increase incatch is mainly expected for saithe and shrimps. En-ergy efficiency improvement is emphasized duringthe development of the new trawlers. The hullshape is inspired by modern offshore vessels andgives lower resistance in the water. Advanced con-trol systems will optimise the use of energy onboard. Diesel-electric propulsion, two main engines,two propellers and the use of electrical winches to-gether with the control system will result in a con-siderable lower fuel consumption compared tosimilar vessels. Systems for reduction in waste gasesand a double bottom layer of the hull also con-tributes to the environmental profile of the vessels.

SWITZERLAND|PHARMARoche grumble: Drug deliver-ies to Greek hospitals haltedBasel-based pharmaceutical company Roche hasstopped deliveries of medications to Greek hospitalsbecause of non-payment of bills, Swiss Info reportedon 19 September. Roche managing director SeverinSchwan said some Greek hospitals had not paid theirbills for three or four years. “We have arrived at apoint where we can no longer conduct business nor-mally,” Schwan said. Since Roche stopped deliveriesin the summer, certain hospitals had begun to paytheir bills because they realised their reputations wereon the line, Schwan said. He added that the companyhad increased its drug deliveries to Greek pharmaciesbecause they paid their bills more regularly.

Back in profit.| EPA/BRYNJAR GAUTI

CROATIA · ALBANIA · SERBIA · BOSNIAPage 34|New Europe CANDIDATESSeptember 25 - October 1, 2011

CROATIA|EU MEMBERSHIP

Accession Treaty for Croatia handed over to Prime Minister KosorOn 17 September the Polish Prime Minister Don-ald Tusk officially delivered the Accession Treaty textto the head of the Croatian government, Prime Min-ister Jadranka Kosor. “We are now one step closer tothe European Union, to being a member in it,” statedPrime Minister Jadranka Kosor. “We still have a fewthings to do before we sign the treaty, but the mostimportant issues have already been done. This inter-national agreement is 300 pages and is certainly oneof the most important treaties and documents thatCroatia has ever signed,” stressed the head of theCroatian government. “The great effort of the Croa-tians, and your government will pay off in the future.I say this as a Pole, who, like my compatriots, hasbeen benefiting for years from the fact that Europe isunited, and we are a part of it,” said the head of Pol-ish government Donald Tusk after the ceremony. ThePolish Prime Minister further added: “These aresigns of hope for the whole of Europe. Today, whenso many politicians are doubting the future of Eu-rope, your effort, your courage, the fact that you arebecoming full participants in Europe, is also a greatinjection of optimism, energy and strength to thosewho believe in the meaning of Europe. Croatia andits prime minister are showing that Europe makessense for the people, for nations and for the great his-torical, cultural and civilisational community towhich we all belong and to which we are returningafter years of absence”.

ALBANIA|EU MEMBERSHIP

EU dampens Albanian optimism on accession process Albanian Foreign Minister Edmond Haxhinastosaid Tuesday he believes his country can still benamed a candidate for European Union accessionthis year, even as EU officials warned again that thecountry's political stalemate was threatening theprocess. "As positive as I am, I believe that this isgoing to happen before the end of this year," Hax-hinasto told reporters in Brussels following a regu-lar meeting on Albania's progress towardsmembership. EU Enlargement Commissioner Ste-fan Fule, however, said he remains concerned aboutthe political situation in the Balkan country, the "ur-gent" need for reforms and "the missed opportunityto make substantial progress" down the EU pathamid a contentious election. The May local poll sawofficial results declare Democrat Lulzim Basha thewinner in the mayoral race in the capital, Tirana,over incumbent and Socialist opposition leader EdiRama, with a margin of just 81 votes. Preliminaryresults had shown Rama ahead by less than a dozenvotes. The election commission then added ballots ithad found in boxes gone astray, leading to criticismby officials from the EU and Organization for Se-curity and Co-operation in Europe (OSCE). Fulewarned that Albanian politicians have yet to provethat they are ready to "put the country's interestahead of party agendas" as part of their pursuit ofEU membership. "I don't know of any country sinceBritain joined in '73 that entered into the EU di-vided. Please take this lesson very seriously," notedPolish European Affairs Minister MikolajDowgielewicz, whose country currently holds theEU's rotating presidency."Ultimately, it is all in yourhands in Albania," he added.

EIB supports the upgrading of Croatia’s infrastructure The European Investment Bank(EIB) is providing two loans inCroatia: €60 million for the exten-sion of the motorway along CorridorVc and €25 million to develop com-munity infrastructure in coastal areasof the country.

The loan of €60 million will sup-port the construction of 13 km ofmotorway along the crucial Vc trans-port corridor linking the Croatiancoast with the Hungarian capital Bu-

dapest through Bosnia and Herze-govina. The project consists of theconstruction of two sections: be-tween Sredanci and the border withBosnia and Herzegovina, includinghalf of the new Sava river bridge inthe North of the country, and fromthe Ploče interchange to the borderwith Bosnia and Herzegovina in theSouth of Croatia.

The loan of €25 million will fi-nance over the period 2010-2013 the

rehabilitation and upgrading of basicinfrastructure in municipalities andtowns in the following coastal coun-ties of Croatia: Istarska, Primorsko-goranska, Ličko-senjska, Zadarska,Šibensko-kninska, Splitsko-dal-matinska, Dubrovačko-neretvanska.

The projects to be supported willcontribute to the protection of theenvironment and human health andhelp the country to implement EUlegislation.

CROATIALOAN

“Important steps have been taken to overcome the legacy ofthe violent past. Sustained efforts are however necessary inorder to achieve post-war justice and reconciliation, eradi-cate discrimination and enhance freedom of the media” saidthe Council of Europe Commissioner for Human Rights,Thomas Hammarberg, releasing today a report following hisvisit to Serbia from 12 to 15 June 2011.

“Greater determination is needed to effectively investigateand prosecute war-related crimes and all remaining obstaclesto effective inter-state co-operation in this context shouldbe removed. It is also necessary to provide adequate repara-tion to all victims for the gross human rights violations theysuffered during the war time.” The Commissioner urges Ser-bia to improve the witness protection system and topromptly investigate and prosecute any threats and intimi-dation of witnesses.

Commissioner Hammarberg invites the authorities tocontinue with determination their efforts, at national and re-gional level, to clarify the fate of the approximately 14 000missing persons in the region due to the wars. He also urgesthe authorities to pursue the efforts made to resolve the re-maining problems of those forcibly displaced during thewars. “The most vulnerable are the approximately 4 000 per-sons living in collective centres. Further co-operation be-tween Serbia, Bosnia and Herzegovina, Croatia andMontenegro is needed to solve the pending issues arisingfrom forced displacement in the region.”

The Commissioner welcomes the strengthening of theSerbian legal and institutional framework against discrimi-nation and racism, as well as the measures taken in recentyears to counter hate crimes notably those committed by ex-tremist groups. He urges the Serbian authorities to give pri-ority to the prosecution of hate crimes and to undertake acomprehensive review of the court sentencing policies inthese cases. He further calls for an enhanced protection ofnational minorities and recommends allowing the electionprocess of the members of the national minority council ofBosniaks to begin in the near future.

As regards Roma, more and systematised efforts shouldbe made to enhance protection and inclusion, in particular inthe sectors of employment, education, housing and health-care. The Commissioner remains deeply concerned by thevery harsh living conditions of the displaced Roma fromKosovo * and the non-registration of Roma children upontheir birth. He also recommends facilitating access to per-sonal identity documents for Roma and the accession bySerbia to two important Council of Europe treaties con-cerning stateless persons.

Widespread homophobia remains a serious concern. “The

authorities should intensify their efforts to fight violence anddiscrimination against LGBT persons, including by havingthe criminal provisions concerning hate crimes more vigor-ously implemented by courts.”

Whilst commending the adoption of legislation protect-ing and promoting the rights of persons with disabilities, theCommissioner remains concerned that a number of elderlyand adults with mental disabilities are placed in institutionalcare without their consent. He is also worried by the reportedabuse of the legal capacity proceedings, often by close fam-ily members, and calls for the amendment of the related law.

Finally, the Commissioner stresses that media freedomshould be better secured. “Defamation should be decrim-inalised and unreasonably high fines in civil cases relatingto media should be avoided. At the same time, the mediacommunity should promote and apply ethical profes-sional standards and to develop a system of effective self-regulation.” He commends the authorities' promptreactions to recent attacks on journalists, but remains se-riously concerned by the impunity regarding past cases ofkillings of journalists and calls for effective investigationsinto all these violent incidents.

"Further progress needed to fosterreconciliation and social inclusion"

SERBIARECONCILIATION

European Commissioner for Human Rights Thomas Hammar-

berg.| EPA/ALBERTO ESTEVEZ

Turkey, Kyrgyzstan, Azerbaijan andKazakhstan intend to strengthen theircooperation in the economic spherewithin the framework of the Coopera-tion Council of Turkic Speaking States(CCTS) by creating a series of inter-stateassociations, which are designed to re-move barriers for joint business projects.It is about creating the Business Councilof Turkic states, a common travel agency,a common Turkic insurance fund andeven an arbitration court, AmbassadorHalil Akinci, Secretary General of theTurkic Council, told New Europe. Threeyears ago in the Azerbaijani city ofNakhichevan during the ninth Summitof Heads of Turkic-speaking countries,it was decided to establish a new associ-ation: The Cooperation Council of Tur-kic Speaking States. The first summit ofthe CCTS will be held in Kazakhstan’scity of Almaty on 20-21 October.Prior to his appointment as SecretaryGeneral of the Secretariat of CCTS, Ak-inci was ambassador of Turkey to Russia.A month before the summit he arrivedin Astana to discuss all organisational is-sues with the hosts of the event.

Mr. Akinci, what will be the main topicof discussion of heads of the four TurkicSpeaking States this time?To begin, I want to remind about the

main purposes of our new Turkic union,which are set out in its charter. The firstis a further development of cooperationbetween the Turkic states, the second isto give the future generations a produc-tive and efficient organisation that con-tributes to fulfil the task. As it is known,today created and operate many interna-tional alliances and institutions. But themain difference between the Coopera-tion Council of Turkic Speaking States(CCTS) and other associations is that itis based on common history, culture andlanguage of Turkic states. As for yourquestion, the summit in Almaty will bedevoted to one head subject -economiccooperation. This decision was justifiedby desire to concentrate on a specificissue and not sprayed in multi-subject. Inaddition, I would like to note that this isnot just a meeting, but a high-level sum-mit, where CCTS will be presented in astatus of international organisation, likethe EU, ECO and OIC.

The theme of economic cooperation israther large, what specific decisions willbe taken to strengthen it?On the eve of the first summit of theCooperation Council of Turkic Speak-ing States, which is known to be held inAlmaty, there will be also a meeting of

economy ministers of Turkic states.Where the ministers will meet, in Al-maty or Astana, is still under discussion.During the meeting the Ministers ofEconomy will consider new mechanismsof regulating the barriers between ourcountries, and longstops to economic co-operation.

What kind of barriers are in question, ifthere is “good” at the highest level?It is about removing barriers, for instance,occurring during transportation of goodsbetween our countries, for example, fromKazakhstan to Turkey or from Azerbai-jan to Kazakhstan. It is also known thatthere is a problem of using water re-sources in Central Asia. Therefore, in theframework of the summit, along with itsformal part, there will be the first meetingof another new association - the BusinessCouncil of Turkic states. By the way, thememorandum of its creation will besigned by the Heads of States at the sum-mit. The Business Council of TurkicStates is intended to consider specificbusiness projects that are offered by rep-resentatives of our countries, members ofthe Cooperation Council of Turkic states.This council will merge our entrepreneursthat can share their ideas and projects. Itcan become a platform for joint projects.And it is the business council to be en-gaged, as I said above, with removal ofbarriers that arise among our countries.For example, we already have a specificproject to be proposed during the meet-ing of economic ministers to work out inthe business council. It concerns thetransport of goods among our countries.In this connection, there will be discussedthe creation of the Transport Agencies ofTurkic states. We intend to consider theestablishment of the Arbitration Courtof the Turkic-speaking states, whichwould review cases of disputes among ourcountries. There is a problem of cargosafety, so there is interest in setting up a

special Insurance fund. It is also plannedto create another special Fund, whichwould focus on supporting those eco-nomic fields that need it.

Uzbekistan and Turkmenistan, whichalso belong to the Turkic countries, werenot included in the Cooperation Coun-cil of Turkic states. Is there any progressin this direction?To start, I again remind that CCTS is avoluntary union of equal Turkic states.All decisions are based on consensus. Asfor Uzbekistan and Turkmenistan enter-ing the Cooperation Council of TurkicStates, it depends on their decision. I amsure that this is a matter of time. Whenwe create a strong organization, and theysee how it is effective and successful, theywill also express their desire to join theCouncil, and then CCTS will include allTurkic states.

What do you think about the problemof Islamophobia that exists in the worldtoday?I will speak not as Secretary General ofCCTS but express my personal opinion.Yes, I agree that there is a problem of Is-lamophobia in the world today. And itappeared not today and not in recentyears, but has existed for centuries. In myopinion, one of the reasons is the wrongmedia presentation of some events thatwarm up hatred against the Muslims.Unfortunately, in Western countriesthere is a mistaken idea. If any person, aMuslim by faith, for instance, commitsarson, then the media surely indicate thatit was committed by a Muslim. There isa kind of negative generalisation, whichconcerns the entire religion. If somethinglike this is committed by a person ofother faith, the media say that it wasmade by a person without indication ofhis or her religious affiliation. This is fun-damentally a wrong approach, whichshould be eliminated.

TURKEY · FYROM · MONTENEGRONew Europe |Page 35CANDIDATES


FYROM|DIPLOMACYSkopje, Bejing to enhance cooperationFYROM Parliament Speaker Trajko Veljanovski andPrime Minister Nikola Gruevski met with a senior Chi-nese legislator in Skopje on 15 September, and both sidespledged to enhance cooperation in various fields, Xin-hua reported. FYROM attaches great importance to ex-changes and cooperation between the two countries'legislative bodies, Veljanovski said when meeting withSang Guowei, vice chairman of the Standing Commit-tee of China's National People's Congress (NPC). More-over, Veljanovski said FYROM hopes to strengtheneconomic and trade cooperation with China, and thecountry welcomes more Chinese companies to invest inFYROM. Veljanovski also said that FYROM is doingits best to join the European Union, and that he believesFYROM would be one of China's reliable partnerswithin the bloc once it is admitted. Afterwards, Sang metwith Gruevski. Agriculture is FYROM's pillar industry,and there is great potential for cooperation in this fieldbetween the two countries, Gruevski said. Gruevskipointed out that FYROM is developing its infrastruc-ture and energy industry, and he hoped China would bepart of the development. Gruevski also said that hiscountry welcomes the arrival of more Chinese tourists.Both Veljanovski and Gruevski said FYROM valuesChina's international status and the role China plays onthe world stage. They said FYROM regards China as animportant force for promoting world peace and devel-opment. They assured Sang that FYROM would stickto the one-China policy, and Sang said China appreciatesFYROM's stand on this issue. Sang said bilateral rela-tions between China and FYROM have made greatprogress in recent years, with deepened mutual politicaltrust and mutual support on issues regarding core inter-ests. Sang said the NPC is willing to strengthen cooper-ation with FYROM's parliament to push the all-roundrelationship between China and FYROM to a new level.Sang and his NPC delegation visited FYROM at the in-vitation of the FYROM parliament.

MONTENEGRO|DIPLOMACYPodgorica, Baku signco-operation agreementsOn 16 September, Montenegro President Filip Vujanovicand his Azerbaijani counterpart Ilham Aliyev held talkswith the participation of the government officials of bothcountries. “I believe the visit will be very successful andbring many positive results. Our bilateral relations are de-veloping very successfully and rapidly,” APA quoted Aliyevas saying. “Political and economic consultations were heldin a short time. Both sides make valuable contributions tothe development of these relations. I believe the negotia-tions held today and to be held further will make ourcountries closer.” Vujanovic recalled the visits of foreignministers and said his visit to Azerbaijan would contributeto deepening and development of the relations. “I considerthat the political relations between the two countries willlay the foundation of economic relations too.” After themeeting, the ceremony of signing documents betweenAzerbaijan and Montenegro took place. Minister of Cul-ture and Tourism of Azerbaijan Abulfas Garayev andMinister of Culture of Montenegro Branislav Micunovicsigned an agreement on culture. Garayev and Minister ofEconomy of Montenegro Vladimir Kavaric signed anagreement on co-operation in tourism. Minister of Eco-nomic Development of Azerbaijan Shahin Mustafayevand Kavaric signed an agreement on promotion and mu-tual protection of investments and an agreement on eco-nomic co-operation between the Governments ofAzerbaijan and Montenegro.

Halil Akinci, Secretary General of the Turkic Council and former ambassador of Turkey toRussia, talks to New Europe

Turkic-speaking countries plan regional business council

TURKEYCO-OPERATION

By Kulpash Konyrova

UKRAINE · MOLDOVA · BELARUSPage 36 |New Europe NEIGHBOURHOODSeptember 25 - October 1, 2011

The Ukrainian government plans to increase organic foodssupply to the international markets. Ukrainian President Vik-tor Yanukovych said his country will stimulate its organic foodindustry to evolve in a stronger industry branch. Ukraine is ca-pable of advancing its organic food industry in a way that willallow the country to become a globally recognized organicfood producer, he added. "In the near future we (Ukraine) will

increase the supply of such products at affordable price to theinternational markets," Yanukovych was quoted as saying bythe press at the meeting of the UN General Assembly on thePrevention and Control of Non-communicable Diseases heldin New York on 20 September. The Ukrainian governmentplans to reform the Ukraine’s agricultural sector in order totransform it into a more efficient industry.

Ukraine to increase organic food exportsUKRAINEFOOD

MOLDOVA|VISAEU assesses progress over visa liberalisation The European Commission has released the first progressreport on the implementation by Moldova of the ActionPlan on Visa Liberalisation (VLAP), saying that the for-mer Soviet republic has made “good progress” in adoptingmigration-related legislation. But the Commission said thatattention should be paid to the reform of the relevant au-thorities in this area, in particular the establishment of theMigration and Border Service. The Action Plan, setting outall technical conditions to be met by Moldova before thepossible establishment of a visa-free travel regime, covers theperiod since it was endorsed by the Council in November2010 and presented by the Commission to the Moldovanauthorities January 2011. Overall, the report covers fourblocks of issues relevant to the visa dialogue: document se-curity, including biometrics; irregular migration, includingreadmission; public order and security; external relations andfundamental rights. The report also assesses Moldova’sprogress towards easier visa rules with regard to two phasesor two tier benchmarks, namely preliminary benchmarks re-lated to the policy framework (legislation and planning),which should pave the way for meeting more specificbenchmarks (effective and sustainable implementation ofrelevant measures). “The work of the Moldovan Govern-ment to date shows that the Action Plan on Visa Liberali-sation is an important tool for advancing reforms in the JHAarea and beyond,” the report read. A second report will beprepared by the end of 2011. An evaluation mission will beorganised in autumn 2011 involving officials of the Com-mission services and the EEAS accompanied by expertsfrom EU Member States.

UKRAINE|PROTESTSAfghan veterans, Chernobyl survivors protest cutsOn 20 September, Ukraine's parliament was surroundedby a group of more than 10,000 protesters in Kiev - in-cluding veterans of the Afghanistan war and survivors ofthe 1986 Chernobyl nuclear disaster - demonstratingagainst threatened cuts to their benefits, Deutsche Presse-Agentur (dpa) reported. Some protesters attempted tobreak police cordons around the national parliamentbuilding, but police were still holding their positions byearly afternoon. Overall, aside from shouting and shov-ing, the stand-off was generally non-violent. The pro-posed benefit cuts would slash pensions and medicalpayments for both groups, part of a cost-cutting bill cur-rently under debate before the legislature. Protestersshouted "Shame!" and hurled catcalls and insults, as po-lice struggled to keep demonstrators from overturningbarriers. Banners carried by the crowd read "Hands offthe Chernobyl law!" and "You killed our sons, don't killour mothers!" Ukrainian President Viktor Yanukovychintroduced the legislation recently in an effort to reducethe national budget deficit, a prerequisite for obtainingadditional loans from the International Monetary Fund(IMF). Fund officials have said cash-strapped Ukrainemust reduce the number of people receiving social pay-ments, as well as the size of those payments, to obtain fur-ther IMF financing. The country's Afghanistan warveterans and Chernobyl accident victims have said theproposed reduction in their benefits would amount to abetrayal of citizens who sacrificed their health for theircountry. The Soviet Union sent more than a half millionsoldiers to Afghanistan during a failed attempt to estab-lish a Socialist government there from 1979 - 1989. Be-tween 80,000 to 100,000 veterans of the conflict arethought to live in Ukraine. Some 500,000 Ukrainians areeligible for benefits due to radiation to which they wereexposed during the Chernobyl nuclear power accident.

The National Bank of Ukraine on 23September introduced identity checkson individuals making foreign cur-rency exchanges at banks and finan-cial institutions in the domesticmarket. "Since 23 September 2011 allpersons will be able to trade in thesame bank in foreign currency duringthe day at 150,000 hryvnias, instead of80,000 hryvnias as it was carried outearlier," the NBU said. Analysts thinkthat the National Bank of Ukrainetries to avoid the collapse of the na-tional currency due to panic of thepopulation. The National Bank wantsto know all currency owners, they say.

The banks will be obliged to makea personal client data into the bankaccount. The NBU said that in carry-ing out currency exchange transac-tions amounting to 50,000 hryvniasthe financial document needs to spec-ify the place of residence of the client,his first and last name. To do this, theclient must present a document con-firming his identity and proof of resi-dence. "It could be any document thatcan attest to the place of residence ofa person: a passport or other identitydocument," the National Bank said.In addition, individuals can carry outtransactions for the sale of foreigncurrency at ATMs.

The public’s demand for foreigncurrency continued to grow in Sep-tember, according to NicholasIvchenko, head of information-ana-

lytical centre FOREX CLUB inUkraine.

At the same time in August, theNBU has continued to sell dollars tosupport the hryvnia. Thus, the vol-ume sold of the U.S. currency on theinterbank market amounted to $998million against 1.1067 billion in July,indicating a stable excess of demandover supply of currency in recentmonths. However, the NationalBank in August bought at the mar-ket clearing €249 million, 552.6 mil-lion Swiss francs and Australian

dollars 226.5 million, which is asso-ciated with a desire to diversify itsregulator reserves on the backgroundof instability in global financial mar-kets. This allowed him to increasetheir gold reserves by 1.04% to$38.2bn. Inflow of foreign exchangecontinues to generate exports ofgoods and services, credit and in-vestment transactions and privatetransfers. Apparently, some exportershave changed their currency con-tracts from dollars to other more sta-ble currencies.

Restrictions for buying, selling dollars, euros

UKRAINEBANKING

On 19 September, Belarus' PresidentAleksandr Lukashenko thanked Chinafor a billion-dollar loan his governmentbadly needed to stay afloat. "We willmodernize Belarus's economy and bringadvanced technologies and innovationswith Chinese investments," Lukashenkowas quoted as saying.

On 18 September, Beijing grantedMinsk the $1-billion loan to assist the

former Soviet republic's ailing economyand infrastructure.

The Chinese funds will fund Belarus'first industrial park and, among otherinitiatives, Lukashenko said, form thebasis for a long-term partnership be-tween the two countries in advancedtechnologies.

Belarus is mired in its worst economiccrisis in two decades because of the high

cost of imported Russian energy and in-ability of much of Belarus' centrally con-trolled economy to produce goods indemand internationally.

Lukashenko has turned to Moscowand even the International MonetaryFund (IMF) for possible financial assis-tance. But Belarus is considered a pariahby most countries because of the gov-ernment's poor human rights record.

Minsk thanks Beijing for billions in aidBELARUSAID

Ukrainians look check out the exchange rate posted in the bank¿s windows in downtown Kiev, 2December 2008. On 23 September 2011, The National Bank of Ukraine introduced identitychecks on individuals making foreign currency exchanges at banks and financial institutions|EPA/SERGEY DOLZHENKO

KAZAKHSTAN · TAJIKISTAN · TURKMENISTANNew Europe | Page 37NEIGHBOURHOOD


An International Monetary Fund(IMF) mission led by Mr. Todd Schnei-der visited Dushanbe during 12 Sep-tember - 21 September to conductdiscussions for the Fifth Review of theExtended Credit Facility (ECF)arrangement. At the conclusion of thevisit, Mr. Schneider issued the followingstatement:

“Discussions were productive andthere was progress on the set of policiesand actions for the rest of 2011 and2012. Further discussions will be con-ducted in Washington, DC during theAnnual Meetings of the IMF and theWorld Bank later this week.

“Tajikistan’s economic recovery con-tinues to take hold. Real GDP growthreached 6.9% through the first half of2011. Rising remittances supported do-mestic trade and services, but growth isalso seen in agriculture, construction,and industry. Inflation has been a signif-icant challenge—peaking at 14.8% inMay, but since declining moderately.

“Looking ahead, real GDP growthshould reach at least 6% in 2011, partic-ularly if prices for key exports remainhigh, and regional partners continue togrow. Nurturing the recovery is impor-tant, and in this context inflation re-mains a key policy challenge. Globalfood and fuel prices are expected to sta-bilize in the coming year, but the mis-sion welcomes the authorities’ intentionto carefully coordinate fiscal and mone-tary policies to protect macroeconomic

stability. Over the medium-term, themission advises the authorities to de-velop and utilize targeted social pro-grams to provide social assistance to thepoor.

“Financial sector indicators have sta-bilized in recent months, but the mis-sion urged the National Bank ofTajikistan to implement the FinancialSector Stability Plan, aimed at address-ing non-performing loans in the banks,and to strengthen accounting and su-pervisory standards. Over time, thisshould help to bolster public confidencein Tajikistan’s banks, create room for pri-vate sector credit, and thus help support

economic growth and employment.Also, with a view to increasing trans-parency and strengthening prospects forinclusive economic growth, the missionurged continued focus on preparing anew tax code. IMF technical assistanceis scheduled to work soon in this area.

“The mission also welcomed the gov-ernment’s continued commitment totransparency. Particularly welcome havebeen the publication of quarterly reportson the operations of the Roghun OJSCand the commitment to continue hold-ing Roghun shareholder’s meetings inthe future, after successfully holding thefirst meeting in May.”

IMF visit “productive”TAJIKISTANFINANCE

After bilateral meetings the US and Kazakhstan have signeda protocol on accession to the World Trade Organization(WTO).

"On the negotiations results the parties agreed on termsthat are to improve the investment climate in the abovesectors of the economy of Kazakhstan," Minister for Eco-nomic Integration of Kazakhstan Zhanar Aitzhanova toldItar-Tass.

"These agreements will allow the Kazakh governmentto pursue the policy in line with the country's nationaleconomic interests, particularly in favour of Kazakhstan'sservice providers and for improvement of employment inthe country as a whole."

According to the minister, "the reached agreements will cre-ate a more favourable climate and stimulate additional invest-ment in the above-mentioned sectors of services, mainly in theprocessing and creation of new industries in Kazakhstan." TheUnited States is a key investor in Kazakhstan, foreign directinvestment into the republic from 1993 to 2011 amounted toabout $40 billion.

Aitzhanova reported that during her meetings with SpecialAssistant to the US President Michael McFaul and US TradeRepresentative Ron Kirk, "the US side reiterated its substan-tial interest for the early accession of Kazakhstan to the WTOand promised to provide assistance in the multilateral negoti-ations in Geneva."

Astana closer to WTOKAZAKHSTAN RELATIONS

KAZAKHSTAN|RELATIONS

Nation applies for UNSC seatPresident Nazarbayev asked UN member states to backhis country’s application to the United Nations' SecurityCouncil (UN SC) as a non-permanent member for2017-2018. The move has the support of India. Kaza-khstan is supporting India’s attempt to become a per-manent member of the UNSC. The Kazakh leader alsocalled for international agreements on cyber security,telling delegates at the UN, “not a single internationalconvention or multilateral treaty governs informationprocesses. Is it not the reason why, in practical terms,most hacker attacks on banks, businesses, governmentinstitutions, military and even nuclear facilities havebeen carried out with impunity?” After addressing the66th General Assembly of the UN, the president hadbilateral meetings with Ban Ki Moon, the UN chief.They discussed security, nuclear non-proliferation andfighting terrorism.

TAJIKISTAN|GOVERNANCE

Election observers spottedThe Organisation for Economic Cooperation and Devel-opment (OECD) has just finished a course for training elec-tion observers in Dushanbe. Thirty people attended thetraining. "The course is not only to train election observersfrom Tajikistan but also a means for all of us to share expe-riences and learn from each other about issues of interna-tional and domestic election observation," said SkyeChristensen, one of the trainers leading the course.

TURKMENISTAN|ENERGY

Dragon developing wellDragon Oil has completed the Dzheitune (Lam)B/159 development well in the Cheleken ContractArea of the eastern Caspian Sea, Offshore reported.The jackup Iran Khazar drilled the well to a depth of2,900 m (9,514 ft) and completed it as a single pro-ducer. On test the well flowed 2,223 b/d of oil. Nowthat eight wells have been completed on theDzheitune (Lam) B platform, the rig has mobilizedto the Dzheitune (Lam) A platform. Next on theline-up are the Dzheitune (Lam) A/162 developmentwell and a workover of the Dzheitune (Lam) A/127well. The NIS rig and Rig 40 are currently drillingthe Dzheitune (Lam) 28/161 and 13/160 wells, re-spectively, both of which should enter production inthe next few weeks. CEO Dr. Abdul Jaleel Al Khal-ifa said: "We anticipate being able to complete fivemore wells before the year-end given the recent addi-tion of jackup slots on the Dzheitune (Lam) A plat-form and availability of the Iran Khazar rig. That willgive us a total of 13 new development wells withinthe 2011 drilling program."

IMF Managing Director Christine Lagarde is applauding Tajikistan’s progress.| EPA/SHAWN THEW

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Bank calls for more home investment resources

UZBEKISTAN · AZERBAIJAN · KYRGYZSTANPage 38| New Europe

NEIGHBOURHOODSeptember 25 - October 1, 2011

Kyrgyzstan doesn’t have home investment resources, NationalBank of KRG Vice Chairman Zair Chokoev told a news con-ference. EurAsEC countries intend to maintain banking sys-tem development in Kyrgyzstan, he said. “The impact of theworld financial crisis begun in 2008 and was felt here only in2009. Volume of the external trade significantly decreased. Themost unfavourable year was 2010. Coincidence of these twofactors had impact on the banking system of Kyrgyzstan. We

were trapped economically. We have survived this period at themoment. Our economic indexes will be raise by December2011,” Chokoev said. He noted that it is necessary to attractforeign investments to the republic to recover the economy.“There is over 60% of foreign capital in the banking sphere.We will carefully examine origin of money and trace bankingtransactions as we had deplorable experience regarding toAUB,” Chokoev said.

KYRGYZSTANECONOMY

AZERBAIJAN|TOURISMNumber of tourists in Azerbaijan grows 9%Due to the declared Year of Tourism in Azerbaijan, theinterest in this sphere in our country has grown, Azer-baijan’s Minister of Culture and Tourism AbulfasGarayev said. “We are studying the results of the sum-mer tourism season and I can say that unlike previousyears, this year we fixed growth in domestic tourism. Wehave information for six months which showed that inthis period the flow of tourists to Azerbaijan has in-creased by 9%, compared to the same period of the lastyear”, the minister said. Over $1 billion will be investedin construction of the winter and summer tourism com-plex Shahdag, the chief of the department of the Min-istry of Culture and Tourism Firuddin Gurbanov saidat a two-day Azerbaijani-Austrian business forum inBaku. Gurbanov said Shahdag is located at the heightof 1500-2300 over the sea and the first cableway hasbeen commissioned. Austrian companies take part inthe complex construction.

KYRGYZSTAN|POLITICSElection Commission to accredit observers Accreditation of International observers to presiden-tial elections in Kyrgyzstan will begin on 30 Septem-ber, the head of Election Technologies andInternational Cooperation Department under theCentral Election Commission (CEC), Berik Isaev, wasquoted as saying by the press. They have already re-ceived applications for accreditation from representa-tives of OSCE/ODIHR, he added. “I cannot say theexact number of observers from this organisation whowill monitor the 30 October elections because they arearriving in groups. The biggest group will arrive fivedays prior to elections. They are short-term observers,”he said. He also added that local observers don’t needthe CEC’s special accreditation. “They take a letter ofreferral issued by the organization they represent andgo to a polling station,” Isakov said.

UZBEKISTAN|AGRICULTURECommittee discusses agricultural lawsAt the Committee on Agriculture and Water Manage-ment Issues of the Legislative Chamber of the Oliy Ma-jlis of Uzbekistan was held a session dedicated to theimplementation in Tashkent region of agricultural normsstipulated by the Land Code of the Republic of Uzbek-istan, a press release read. The meeting was attended bydeputies, representatives of the Institute for monitoring ofcurrent legislation under the President of Uzbekistan, theProsecutor General's Office, Ministries of Agricultureand Water Resources, Justice, Finance, Economy, StateCommittee Yergeodezkadastr, Association of Farmers,the Council of Ministers of the Republic of Karakalpak-stan, business entities and the mass media professionals.The Chairman of the Committee on Agriculture andWater Management Issues of the Legislative Chamberof the Oliy Majlis, M. Teshaboev, and others noted thateconomic reforms in the agricultural sector of the coun-try conducted under the leadership of President IslamKarimov, promote to ensure the internal market withhigh-quality agricultural products at an affordable price.In this process, the rational use of land and dekhkanfarms is important. In Tashkent region main attention ispaid to the rational use of land, in particular, preservationof ecological stability, increase soil fertility, attract inno-vative technology to improve its reclamation condition.The relevant legislation is performed.

Azerbaijan intends to meet 20% demandof the country’s electricity on account ofalternative sources by 2020, director ofthe State Agency for Alternative andRenewable Energy Industry and EnergyMinistry Akif Badalov said. He addedthat today’s share of alternative sourcesin the country, given the use of small hy-dropower stations, is 10%.

The agency pays great attention tostudying the experience of countrieswhich have already achieved some suc-cess in applying these technologies, whiledrafting plans on the alternative energy

sources in Azerbaijan. The agency alsointends to consider mistakes made bythese countries in the alternative energydevelopment.

Badalov named high prices for energyproduced by alternative sources, hugesubsidies, and a high cost of technologyin the field. The main objective of re-newable energy development in Azer-baijan is to achieve the lowest possibletariffs.

He said it will be possible to name thevolume of necessary tariffs and subsidiesfollowing the accumulation of necessary

statistical data and conclusions derivedfrom the Gobustan polygon, which wasrecently commissioned.

Studies conducted in the alternativeenergy sources will allow choosing themost appropriate location for placing thetechnology on regeneration of energysources. When placing alternative energyobjects, the agency will take into accountthe principles of urban development,tourist accommodation, and farm facili-ties. Particularly, one of the options forplacing wind energy regeneration plantsis offshore zones.

Azerbaijan to boost share of renewablesAZERBAIJANENERGY

China's IPPR Int. Engineering Corpsigned a contact with the Ministry ofAgriculture and Water Management ofUzbekistan to construct two pump sta-tions with the cost of $30.8 million, Uz-Daily.com reported. The Chinesecompany will build pump station in Nar-pay district in Samarkand region and re-place eight blocks with the capacity of1,600 cubic metres per second each. Thecompany will also construct pump sta-tion in Beshariq district of Ferghana Val-ley with replacement of 10 blocks withthe capacity of 1,400 cubic metres per

second each. The project will be realisedwithin two years. The project will be fi-nanced due to loan of the Asian Devel-opment Bank for $100mn, which wasprovided to the Government of Uzbek-istan in December 2009. The ADB loanwas issued within the project on man-agement of water resources in Ferghanaand Zarafshan Valleys with total cost of$144 million. The Government ofUzbekistan issued $44 million for theproject. The project will ensure sustain-able development of agriculture at irri-gated lands and increase efficiency of

water and land resources use in these twovalleys.

The Government of Uzbekistan isplanning to attract preferential loans ofthe international financial institutionsand the Chinese government for$500mn for reconstruction of the eight-een pump stations in the country. In2010, China’s Electric Equipment Cor-poration (CNEEC) constructed threepump stations in Andijan region with thecost of $20 million. The project was fi-nanced due to loan of Chinese Exim-bank for $13 million.

Chinese company to build 2 pump stations in UzbekistanUZBEKISTANWATER

Azerbaijan intends to meet 20% demand of the country’s electricity on account of alternative sources by 2020 |EPA/QILAI SHEN

RUSSIA · GEORGIA · ARMENIANew Europe |Page 39NEIGHBOURHOOD


On 20 September, the European Courtof Human Rights (ECHR) in Stras-bourg ruled that the Russian govern-ment's dismantling of oil giant YUKOSviolated human rights, but said Moscowdid not misuse legal proceedings inbreaking up the group run by jailedKremlin critic Mikhail Khodorkovsky.

The ECHR ruling was a lot betternews for the Russian government thanfor the YUKOS side. “The EuropeanCourt of Human Rights (ECHR) ver-dict in the YUKOS case proved to be abit of a damp squib yesterday (20 Sep-tember), albeit, given what was at stakethe outcome is more of a victory for theRussian State than for the plaintiffs,”Chris Weafer, chief strategist for TroikaDialogue in Moscow, wrote in an e-mailed note to investors on 21 Septem-ber. “The verdict, which the ECHRstated is not final, allowed both sides toclaim victory while leaving the issue stillhanging. Except now what is hangingover Russia is only a question mark andnot the sharpened Sword of Damoclesthat had been feared. The ECHR ac-

cepted that YUKOS rights had been vi-olated but that the case was not politi-cally motivated. It allows a three-monthwindow for either side to appeal the ver-dict and did not rule on the issue of com-pensation,” Weafer wrote. “YUKOSshareholders claimed $98 billion in dam-ages. The ECHR allowed three monthsfor both sides to negotiate a settlementand, if (as is almost certain) they cannotagree, the court will then arbitrate,” headded. Russian officials said the ECHRruling vindicated longstanding Kremlinarguments that YUKOS and Khorork-hovsky had violated Russian law andwere legitimately punished for theircrimes. "We have no grounds to appealthis ruling. It factually was in favour ofthe Russian Federation," Interfax quotedRussian Vice Minister of Justice AndreiFedorov as saying.

However, a statement by Khor-dorkovsky's lawyers, published on hispersonal website, declared the Europeancourt ruling a victory in his client'sfavour. "We are pleased by the Europeancourt finding that the Russian Federa-

tion committed serious violations of therights to a fair trial and to protection ofproperty in prosecuting YUKOS," thestatement said in part.

A Russian court in 2004 foundYUKOS guilty of tax evasion and orderedit to pay billions of dollars in taxes, inter-est and penalties. The company appealedthe verdict all the way to Russia'sSupreme Commercial Court, but lost.

The case destroyed the company. In2006 YUKOS was declared bankrupt.Former YUKOS executives appealed thecase to Strasbourg in 2004, complainingof irregularities in the proceedings and thelack of proportionality in the tax assess-ments and their enforcements. The state-ment from Khodorkovsky's lawyers said"financial compensation" was not the goalof their lawsuit against the Russian gov-ernment. Khodorkovsky, who was con-victed and jailed for fraud and tax evasion,also appealed his prosecution to the Eu-ropean Court of Human Rights. In May,the court ruled that Khodorkovsky's trialwas not political but found that some ofhis basic rights had been violated.

Former head of Russian YUKOS oil company Mikhail Khodorkovsky, centre, and his business partner, head of Menatep bank Platon Lebedev, right, wait inthe defendants' cage during a court session in Moscow's City Court, Russia, 24 May 2011. On 20 September, the European Court of Human Rights(ECHR) verdict in the YUKOS case proved to be more of a victory for the Russian State than for the plaintiffs |EPA/IGOR KHARITONOV

RUSSIAYUKOS CASE ARMENIA|ECONOMY

IMF: GDP growth seen at 4.2% in 2012In its latest World Economic Outlook the InternationalMonetary Fund (IMF) the growth in Armenia is projectedto reach about 4.3% in 2012 and inflation 3.3%. The GDPand inflation projections for 2011 are 4.6% and 8.8% re-spectively. The IMF emphasises that growth in the Com-monwealth of Independent States (CIS) region has beensupported by strong commodity prices, but downside riskshave risen with the global slowdown.

ARMENIA|ANNIVERSARYArmenia celebrates20 years of independenceOn 21 September Armenia marked 20 years of independ-ence from the Soviet Union by a showpiece parade. Some4,000 troops lined up in Republic Square in the capital Yere-van accompanied by tanks, missiles, helicopters, fighter planesand, for the first time, Armenian-manufactured spy drones,local news agencies reported. Addressing the parade, Presi-dent Serzh Sarkisian said that when the small Caucasus stateof 3.2 million people became independent in 1991, "a hugepart of our country was a disaster zone after an earthquakeand we stood on the brink of war." "In two decades, we havemade a giant leap forward but there is still a lot that we havenot managed to do," he said. Sarkisian described Armenianforces' victory in the 1990s war with Azerbaijan over the dis-puted territory of Nagorno Karabakh as "the most gloriouspage in our recent history". Russian troops who have a basein Armenia also took part in the parade to reflect their role inprotecting the country's national security, according to thedefence ministry. Armenia has gone through political andmilitary turmoil since independence amid a series of disputedelections and the war with Azerbaijan over Karabakh thatkilled some 30,000 people and sparked a huge refugee exo-dus. The Karabakh conflict has remained unresolved sincethe ceasefire in 1994 with regular outbreaks of shooting alongthe frontline and repeated threats from Azerbaijan to takeback the territory by force if long-running peace talks don'tyield results. US Secretary of State Hillary Clinton sent amessage on behalf of President Barack Obama congratulat-ing the people of Armenia as they celebrated the 20th an-niversary of their Independence. “The United States valuesour relationship with Armenia, rooted in mutual respect andinterests. Together, we are working to reduce poverty, expandtrade and investment, promote the work of civil societygroups and broaden access to healthcare,” Clinton said.

GEORGIA|FROZEN CONFLICTSTbilisi calls for removing Abkhaz restrictionsGeorgia called for removing restrictions on citizens' move-ment through the administrative border with Abkhazia inthe Georgian-Abkhaz conflict zone at a traditional four-waymeeting in Gali. The Georgian delegation head, head of theinformation and analysis department under the GeorgianInterior Ministry, Shota Utiashvili, was quoted as saying bythe press that this issue was raised because of sharp restric-tions on Gali residents' movement across the so-called Abk-haz border. "They do not let people enter neighbouringZugdidi region, controlled by Tbilisi," he said. "People aredeprived of opportunities to trade, as well as to undergomedical treatment in Zugdidi, having the best conditions.They cannot visit their relatives through the Inguri River."Utiashvili said the Russian side did not react to the Georgianside's statement. The meeting does not aim at getting a spe-cific result. "The situation is being discussed and the positionis being fixed," he added. The Georgian side also stressedthe violations of human rights in the occupied territory, bypointing to a negative criminal situation in the Gali region.

European court ruling chills plaintiffs

The International Monetary Fund (IMF) said that Russia'seconomy will grow slower than previously estimated in 2011and 2012 as the outlook for oil prices has worsened and capi-tal continues to leave the country. In the lead up to the annualmeeting, the IMF on 20 September downgraded globalgrowth forecasts for all of the world’s major economies, in-cluding Russia. “None of the downgrades came as much of asurprise. Importantly for Russia, none should give cause to theIEA or OPEC to materially adjust their oil demand growthforecasts for 2012,” said Chris Weafer, chief strategist atMoscow’s Troika Dialogue. The IMF cut Russia’s 2011 growthoutlook from 4.8% to 4.3% and, for 2012, from 4.5% to 4.1%.It cited continuing capital outflow, political uncertainty and oilrisk as the reasons for its more cautious approach. The recentlyreleased August macro report shows that growth is actually

strengthening. The IMF does, however, expect Russian growthto top that of Brazil for which it expects 2011 growth of 3.8%and, for 2012, +3.6%.

"Capital flows — which fuelled credit, private demandand growth before the crisis — have yet to return," the IMFsaid. "Investors remain wary of the political uncertainty in therun-up to presidential elections and the uninviting business cli-mate." Prospects for oil, Russia's chief export earner, have de-teriorated since the IMF reviewed its economic forecastsin June, the report said. Russia may see $30 billion to $40 bil-lion in net capital outflows this year, Deputy Economy Min-ister Andrei Klepach said on 27 August, reversing the ministry'searlier forecast of zero capital flight. Outflows through the firsthalf are estimated at $31.2 billion, according to preliminaryCentral Bank data.

RUSSIAECONOMY

IMF downgrades Russian growth forecast

KASSANDRAThere have been many unusual things seenoutside the parliament, but until now, wethought the dinosaurs were inside thebuilding

Page 40 | New EuropeSeptember 25 - October 1, 2011

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Once upon a time in Brussels...

Follow me on twitter @Kassandra_NE

The Task Force for Greece should not failThe latest administrative inventionof European Commission presidentJose Barroso, the Task Force forGreece, is about to be officiallylaunched and only a few (secondarynominations) are missing.The operation will be headed by for-mer Director General of Administra-tion of the European Commission,Horst Reichenbach, who will beheading the entire project from Brus-sels while the head of operations inAthens will be Georgette Lalis.Horst Reichenbach is a very goodchoice, having successfully managedas Director General Administrationduring the difficult years after the ad-ministrative reform of Neil Kinnock,an attempt by the Anglo-Saxons tofully control the European Commis-sion by introducing outsourcing forpolicy planning. Excellent choiceshave also been made: JorgenHolmquist, Alain Scriban, Jens Bas-tian and George Kolyvas. The later,has been responsible for public proj-ects in Greece for several years andhas succeeded in convincing theGreek authorities to go by the book,in following regulations and aban-doning unorthodox tactics used inthe first years of association.The case of Georgette Lalis is differ-ent. A lady with top qualifications,who is very close to former GreekCommissioner Vasso Papandreouand served in her cabinet as the mosttrusted member of her team. Geor-gette Lalis failed with the Greekcadaste when appointed by Vasso Pa-pandreou as Chairman of the GreekCadaste Organization, yielding toGreece a substantian penalty (inmoney terms). It should be noted

that the failure of the Greek Cadaste,is not a fault of Georgette Lalis but ofthe Cadaste team which were all po-litical appointees of the government.Many interpret the appointment ofGeorgette Lalis, in heading theAthens Task Force team as an indi-rect, yet clear return of Vasso Papan-dreou in the George Papandreougovernment, via Brussels, in a key po-sition, which will have authority, ac-cording to Brussels wishful thinking,over the Prime Minister himself.

A wrong choice was the BritishDavid Wright, who served as Direc-tor in Internal Market considered bymany responsible for many of thedistortions and inperfections of theEurozone. It goes without saying thatit was a mistake to appoint a Brit(Britain is not in the Eurozone) re-sponsible for the Euro currency inthe first place (in DG MARKT) as itmay prove an even bigger mistake tomake the same responsible for bank-ing and finance in the country which

is, at the present moment, highly cru-cial for the future of the Euro and theEurozone itself.In this great endeavor in which JoseBarroso has invested his hopes of cre-ating a model that is applicable forany countrywhere will be needed,there a couple, yet very important,questions to be addressed.In Greece, it is likely that events willprecipitate very fast. It seems thatthere will be announced a generoushair-cut of the Greek state bonds by

50%. This will probably happenshortly... before the Greek state willreceive the sixth installment of theEU loan to Greece (about €8,5 bil-lion). After that, Greek banks will besupported by the Greek state with acapital injection from the €30 billionestablished for that purpose last July.In this way the Greek banks will notgo bankrupt and will be able to fi-nance Greek businesses to recoverfrom recession and start the develop-ment of the country. Immediatelyafter Greece gets the sixth instal-ment, the government is likely to callfor elections and pass power to theopposition.Since the return of the opposition,under Antonis Samaras for Greece isa matter only of time, the first ques-tion to be addressed is, did Jose Bar-roso have any understading withAntonis Samaras on the compositionof the Task Force?Furthermore, the people that will betransferred in Greece are all qualitycivil servants who so far live in a safeand easy environment. What preven-tive measures did the Commissiontake to protect these people from aany attempt against their personalsafety? In Greece we have witnessedin the last decades, a number of suc-cessful terrorist attacks against per-sonalities, much less important thatthe Task Force team and very wellprotected with body-guards andblindo cars. All these people JoseBarroso is sending to Athens are usedto go on their by bus, train or bike ontheir every-day journeys and are notused to walking in the midst ofdemonstrations and riots, or to inhaletear gases during working hours..

A reversal… of fortuneTwo Polish EPP MEPs sent out an invitation to go tothe Parliament to watch a film, the black comedy Re-verse, part of the celebrations to mark Poland’s presi-dency. The screening was, “with special participation ofMrs Agata Buzek, actress who plays the main role in“Reverse” and Mr Jerzy Buzek, President of the Euro-pean Parliament.”Funnily enough, the actress is the daughter of the Pres-ident. Not only that, she was named as one of Europeanfilms' Shooting Stars by European Film Promotion. Herlisting on the Shooting Stars website somehow fails tomention her esteemed father, but it does mention… thatthe EFP and the Shooting Stars programme is fundedby… the Commission’s MEDIA funding. Fans will berelieved to know that Barroso said about the pro-gramme, earlier this year, “Rumours that we intend toabolish it or reduce its funding are completely un-founded. On the contrary, our plan is to strengthen theprogramme in future."The young Miss Buzek is certainly a fine actress, but itcan be said that both father and daughter are appearingin a black comedy!

McGuinness takes aimat the Irish Presidency

Council summits could be rather moreinteresting in the future, if Sinn Fein’scandidate wins the October election. Tohelp people through the campaign, hereis a list of useful phrases that can be usedwhen discussing his campaign:He’s the right caliber for the job.He has been accused of possessing ashort fuse.There are always those who prefer snip-ing from the sidelines.

The campaign might blow up in his face.Some may recoil at his shot at the presidency.The provisional election results…Some suspect it is a device to increase the party’s influence.His experience of bank jobs will help Ireland overcome the current fi-nancial crisis.There are fears that his campaign may end up bombing.The announcement sent shock waves through DerryHe has blasted his critics.

Czech out!Czech Foreign Minister Karel Schwarzen-berg, who has been known to nod off in po-litical meetings, fell asleep during a recentconference on Balkan security, media re-ports revealed.Czech and Slovak media gleefully cited

Serbian tabloid Kurir, which had called theincident a "scandal." Schwarzenberg had re-portedly slept for at least half an hour dur-ing the security conference in the Serbiancapital Belgrade. Czech daily MF pointedout that the minister often napped duringparliamentary sessions and other meetingsin Prague, and made no secret of it. "If there are many people in the room andthe oxygen content drops and, on top ofthat, bright lights force me to close my eyes,then I cannot resist," Schwarzenberg hadpreviously told the paper. "But I take careto miss nothing important. Unfortunatelythat does not always work, sometimes I losethe overview," he had added.

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